What happens when a diesel runs low on oil?

Answer 1

Same as any internal combustion engine - it overheats and wears out.

Oil provides many protections to an engine. While it can cause over-heating, there are many other things that happen. If your diesel engine uses Huey style injection it uses oil pressure and viscosity as a reference for injection pressure. If your oil pressure or quality is low less fuel is injected into the cylinder for each combustion event. It's a good indicator that you need to check your oil, but it's mostly inconvenient. Oil, when pressurized inside your engine provides a cushion between the crank journals and the main bearings (block), Rod bearings and crank, cam and block, lifters and block, lifters and cam, valve and guide, the list goes on. If your engine runs low enough on oil to prevent the oil pump pick-up from drawing oil from the pan something is going to miss out on lubrication. Depending on what style engine you have (priority main-oiling or no) the damage can get severe very quickly. If you had it a quart low I wouldn't worry about it too much. Just top it off. If your stick was dry the last time you checked it you might be in trouble.