The only known problem for people, mammals and birds that I have ever been able to find any reference to is inhaling it in.
For food grade diatomaceous earth, there is only the bother of breathing in any dust.
There exists another variety of diatomaceous earth that has been fiddled with so it can be used for pool filters. The pool grade stuff would be bad for you because it contains up to 70% "crystalline silica". My understanding is that if you work with the pool grade stuff all day, every day, for years, you could get cancer. Don't mess with the pool grade stuff. Genuine Food grade diatomaceous earth will contain less than 1% crystalline silica.
This article is really about the pure, food grade diatomaceous earth. I have to say "food grade" over and over or someone will quote a small slice and then bring up the pool grade type and say "its glass".
I have customers that ask will diatomaceous earth "the tiny particles cut my lungs?" Answer: No.
I think the truth behind these reports is that these folks heard how diatomaceous earth works, and when they would breathe in the dust, it would make them cough - just as breathing in flour or corn starch would make you cough.
The thought of the sharpness at a microscopic level is concerning to some, our understanding is that when diatomaceous earth becomes moist, the sharp thing is no longer happening. That's why you have to keep it dry when you use it.
As long as you are using food grade diatomaceous earth, you are perfectly safe. Even if you breathe in lots of it. Of course, if you are asthmatic or have lung problems of any kind, I would think breathing in any kind of dust would be a bad idea.