The mod does nothing when I just dig away

That is not a bug — it is the step almost everyone skips.

Mining Layers only takes effect inside a TerraFarm working area. If you dig freely into the landscape, you dig ordinary terrain and the mod has nothing to do.

Three steps and it runs

1. Draw an area around your pit. You can leave the material fields inside it empty.
2. Assign that area to your machine as its input area — this is the step everyone misses.
3. Dig.

If it still does not take effect

Since 1.5.0.0 the mod writes to log.txt why it did not take effect — there are six possible reasons and one of them will be in there. Before that it exited silently, which made troubleshooting needlessly hard. Post that line here and we can see straight away what is in the way.