As nouns the difference between dug and dag

is that dug is mammary gland on domestic mammal containing more than two breasts while dag is a hanging end or shred, in particular a long pointed strip of cloth at the edge of a piece of clothing, or one of a row of decorative strips of cloth that may ornament a tent, booth or fairground.

As verbs the difference between dug and dag

is that dug is past tense of dig while dag is to shear the hindquarters of a sheep in order to remove dags or prevent their formation.

As an interjection dag is

expressing shock, awe or surprise; used as a general intensifier.

As an initialism DAG is

Deputy Attorney General in several nations’ federal governments.