So can someone summarize the ordeal?
Imagine a pub (Digg) that everyone in town went to. Everything was great until the pub decided to try to make more money by forcing patrons to sit a certain way. Everyone in town decided to boycott this pub, and then they found another pub (Reddit), that didn't have the silly monetization scheme that the Digg pub had. The influx of new patrons turned this quiet little pub in the corner of the town into the main pub in town. Everyone was welcome in this pub - sports types, gamers, geeks, fitness nerds. Everyone had their own little corner, and for a few years the pub provided the town with a place to meet up with people of similar interest, even if the interests were darker in nature.
During the last year, the pub decided to hire a new manager (Ellen Pao). The new manager wants the pub to be a more welcoming place for people of all types so she decides to ban a group of rowdy patrons. However, other patrons felt that Ellen Pao intruded on their freedom to express themselves and their own opinions in the pub, and an uprising took place. To calm the uprising, Pao decides to completely silence people who talked shit about her (shadowbans, subreddit bans), and bans out even more groups of people. Patrons were NOT happy about this situation.
Then, the managers of this pub decided to fire a very well loved employee who contributed a lot to bringing awesome guests to the pub, without letting the patrons or the other employees know about it. This made other employees of the pub very angry, as they all loved what she does for the community. To make matters worse, the managers make snide comments about the situation. Due to the previous Ellen Pao bannings and the recent firing, everyone in the pub decides to riot in whatever way they can. They also consider moving to a new pub in town (voat.co) though the pub seems to always be full.
People were angry, and they knew they have the power to completely render Reddit unpopular, just like they did with Digg. Reddit listened to the community rather than got stuck inside their own views on what the website should or should not be and the resignation of Pao was the outcome; a good PR move.