Yes, there is 'documentation' for the standard library, and digest is one of those included. However, as it states in the intro to the library, the docs are created by volunteers, there aren't too many volunteers, and there are lots of things to be documented.
At least the lack of documentation is documented: if the name of the library entry is bolded, then it has good docs; if it's in italics, it doesn't.
digest is in italics.
I guess this is to be expected for a young environment. There was a comment on the mephisto blog recently by Rick decrying the up-and-down nature of Rails development (he called it cyclothymic).