In a few words, Diald creates a new network interface
and sets it as the default gateway. This interface is not real
(in the original documentation it is called proxy
interface). Diald monitors this interface, and,
when packets arrive, makes a ppp connection, waits
for it to be stablished and changes the default gateway to this
new ppp interface (usually ppp0).
Diald monitors the interface to determine which packets
have been received the interface and their types to decide if
they are going to be considered to set the ppp
connection up, maintain the link, drop it or do nothing, and how
long the link should be help up after the packet is transmitted.
Finally, if there is no more traffic and the last packet up time is over, Diald will close the link.
You can control days and hours when the link can go up and when it cannot, so you can use the low cost hours/days or low trafic times.
This previous description is valid for Diald versions
from 0.16.5 to latest (0.99.3 when this document was finished),
but latest versions also include aditional attributes such as
user enabled list, advanced accounting, better support for ISDN
lines, better performance using an ethertap device
as proxy (this is like a network interface that read/writes over
a socket instead of a real network adapter) in place of
slip, backup connections and other functions.