There are 9 Diglett to find in Challenge Beach.
Alolan Diglett #1, #2, #3
The first three Digletts can be found close to each other. Once you enter Challenge Beach go to the two large rocks by the entrance to Soothing Wetlands / Courageous Cavern. Head to the side of the rocks that are facing the ocean. There is one Diglett by each rock. At the ramp where the grass meets sand hides yet another Diglett.
Alolan Diglett #4, #5
From the Tower of Waters walk down the sand trail towards the beach. Once on the beach look to your left to see a hill with a tree and Pokemon Den on it overlooking the water. The next two Diglett are hiding up here. The first one is out in the open by the cliffs edge past some flowers.
The second one is hidden well. It is behind the tree within some bushes. When you go behind the tree the camera may zoom in which you can use to your advantage to scout out the Diglett.
Alolan Diglett #6
From the Tower of Waters walk down the sand trail towards the beach. Once on the beach look to your left to see a hill with a tree and Pokemon Den on it. The Diglett is hiding in the sand beside the slope of the hill.
Alolan Diglett #7
From the Tower of Waters walk down the sand trail towards the beach. Once on the beach walk forward towards the large rock with grass growing on top. The Diglett is by the small group of flowers to your right.
Alolan Diglett #8
The next Diglett is really easy to miss. I walked up to this bush multiple times but did not see any sign of a Diglett hiding inside of it. The only way I ended up spotting it was riding my bike along the river. To reach this spot enter Challenge Beach by exiting the river from the Soothing Wetlands. Head right along the edge of the river until you reach this group of bushes at the base of the rock. The Diglett is inside the bush/flower closest to the water.
Alolan Diglett #9
Head to the Tower of Waters and face its door. The Diglett is by the peg to your right.