Are they some bizzare version of a shoggoth, created by some elder race? Are they themselves an evil, interdimensional lovecraftian horror? This might explain why they can be in two casually disconnected universes! Are they just mundane bird things intelligent enough to be exploited by greedy industrialists?
I suspect as Gaslamp Games mascot creature they have acquired the ability to sidestep through parallel dimensions. Or maybe Diggle Hell is connect to all universes at once (hence why its so easy to end up there from the wizardland portal)
That would probably require non-sentient diggles to not be horribly cruel. Considering the dwarf fortress inspiration, they're probably articulate and cultured, and you get to butcher them for meat.
Maybe we get to the natural habitat? I'm envisioning a huge honeycombed structure that in some places comes close enough to the surface that it can be reached with a basic Clockwork Earthdisplacer, and once inside, a tunnel network may be devised for subterranean steam engines. (Although, it wouldn't necessarily be displacing 'Earth', and anything underground wouldn't be sub'terra'nean, but hopefully the point is made.)
Somehow I dunno if Gaslamp Games is willing to brave the ratings agenciesand canadian authorities when it comes to a proper diggle breeding game. Also wouldn't we already have been the natural habitat of diggles in Dungeons of Dredmor? Essentially, a gigantic deathtrap of a dungeon.
I had the impression they built the dungeon under duress - which doesn't mean it isn't their natural habitat, but perhaps there are differences when they aren't forced to build rooms a certain way.
Of course they are too small to ride, so mostly the Golden Diggle is just impossible to cage since it can walk over any terrain! And then it runs off and finds muscle diggles and they storm you city.
