From a story on Webware

A story was posted that contained the hexadecimal decryption key that allows Linux users to decode and play HD-DVDs. The Digg staff received a request from the Advanced Access Content System License Administrator to remove the story, interpreting the request as following the law and as falling under Digg's pre-existing terms of use that prohibit the posting of infringing content. Jay Adelson explained this in his blog post at 1pm on May 1st.

The Digg user community was not to be silenced, and found a way to route around this censorship. Digg users posted links to hundreds of stories that contained the decryption key, and each one was Dugg up, until the entire site seemed to be nothing but a repository for this one string of hexadecimal digits. A few Digg users found their accounts suspended for misuse.

At 9pm, Kevin Rose reversed course, with another blog post: "...after seeing hundreds of stories and reading thousands of comments, you've made it clear. You'd rather see Digg go down fighting than bow down to a bigger company. We hear you, and effective immediately we won't delete stories or comments containing the code and will deal with whatever the consequences might be. If we lose, then what the hell, at least we died trying."

Link to Webware story
Link to TechCrunch: Digg Surrenders to Mob

Update:
The story has made it to the BBC. Link