From Bulbapedia, the community-driven Pokémon encyclopedia.
Diglett Village (Japanese: ディグタのむら Digda Village) is a small, anime-exclusive village on Red Rock Isle. Years ago, the villagers were trying to cultivate the infertile land of the island when they befriended the Diglett. The Diglett helped them turn the desert into lush, green farmland. This tale was told all throughout the Whirl Islands.
Over time, they remained in Diglett Village, but their children migrated to a nearby town that was also built by the Diglett. The children hoped to move the Diglett villagers to their custom-built retirement home to allow their hardworking parents and grandparents to retire and enjoy a comfortable life. However, the original villagers were defiant and stayed on their land, so the children came up with the Band of Diglett thieves, a ploy meant to keep the elderly active. The Diglett villagers believed that the Band of Diglett thieves were a genuine threat and still waged battle against their adult children because of their great pride.
According to James, the population of Diglett Village, excluding Rita and Sue, is 20, while the Band of Diglett thieves numbers more than 50.
Pokémon seen in Diglett Village