I very much respect NYREDS' opinions, and actually agree with his post about DE in many ways.
However I would like to point out that there is a whole big range of different ways to use DE, and some of them are better-founded and probably safer than others.
Personally, I have used it to treat mites (acquired when hens were in tractor during a week wtih huge starling flocks moving thru the yard) and it worked GREAT. Two treatments, about a week or ten days apart IIRC, just gently puffed the DE past the feathers to the skin and worked it around a bit to get it distributed. I also put a small amount in crevices where the roost attached to the wall, etc. Presto, no more mites (well, I can't guarantee there was not a single one left, but they became virtually impossible to find on the birds and birds quit itchin' and mites quit crawling on me, so to me, that's total success).
After that I put a small amount into similar crevices in the 'real' coop, just as a precaution. No idea what would have happened if I hadn't, but the mite problem has never recurred.
I expect it's fairly harmless in food in small amounts since that IS what food-grade DE is intended/approved for -- as an additive to stored wheat etc. and it's used quite often that way. To me the jury is totally out on whether it is a useful wormer or worm preventative -- unfortunately no believable studies seem to have ever been done. I wouldn't hold my breath but wish someone WOULD do it, since it would be great to know about if it did indeed work well.
My problem with it being used in an attempt to combat dampness is that it quite often seems to be being used INSTEAD OF more basic management or facilities changes that would cure the problem more lastingly and properly.
It worries me a bit when people write about scattering it about gaily all over, breathing it in, putting large quantities into dust baths, putting out significant amounts for water absorption, etc... but then you know on the grand scheme of things I doubt it is much of any worse for our lungs or our birds' than many of the OTHER things that are often done, like having real humid or real dusty coops, patches of mold under feeders or in corners of coop walls, having no top on run so flock is vulnerable to hawks, crossing intersections against the light, etc etc.
So personally I think it is neither quite so harmless-no-matter-what as some seem to feel, NOR as gruesomely dangerous as others seem to feel. And I think there is a middle ground in terms of how you use it.
JMHO,
Pat