There are two big differences: The publishers; and the audience. You can’t just Buzz any old page on Yahoo, instead it has to be one of a select group of publishers, which Yahoo is increasing on a rolling basis. Whilst the Yahoo!Buzz audience is also more mainstream, closely resembling the average internet audience, rather than those geek-survivalist-libertarians (“it’s all a conspiracy because it said so in a film I downloaded illegally on the internet”).
Which is better? Well that depends on what you want? Rather than bad news for Digg, this could actually be seen as good news for the Digg community. Yahoo!Buzz provides a place for the mainstream users to go, and stop interrupting the conspiracy theories that are so much more interesting than reality. Whereas the mainstream user no longer needs to put up with the opinions of Digg-pin-ups like Rosie O’Donnell.