What
zenjenny said. Like a lot of slang, it can also be used other ways: "You dig?" equals "Do you understand?" for example.
This started me thinking about where the term came from. I don't know, for certain, but for me it conjures up images of beatniks from the 1950s. Imagine them sitting around in a hole-in-the-wall coffee place, drinking espresso, smoking cigarettes, idly reading a paperback by Alan Watts or Jack Kerouac, jazz or folk music playing in the background. For the men: black turtlenecks, berets, goatees, dark glasses. For the women: black leotards, long straight hair, oversized sweater, dark glasses, no beard.