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DE is a desiccant....it tends to dry things out...things like poop and excess moisture (which leads to fungus). To insects, it's like walking through razor blades. It will pierce the exoskeleton and basically suck all of the juices out of a bug.
Everything in my run touches the shavings. The chickens, their poop, whatever food gets spilled....everything. To my way of thinking, "frosting" each individual shaving with DE gets it everywhere it needs to be. Since I have been doing this, I get no bad odor whatsoever from the run, and the flies are WAY down. It is also a very efficient way of using the rather expensive DE....there is literally NO waste of it. A lightly powdered surface is all the DE you need.
DD