https://www.quora.

com/Why-do-your-toes-fall-off-when-you-have-
diabetes/answer/Alrein-Wajong

Because you can get diabetic foot, one of the complications of diabetes
mellitus. Peripheral neuropathy (damaged nerves ==> reduced sensation of pain,
heat, cold) develops and the sufferer may not feel a foot injury. This becomes a long time,
unnoticed, open ulcer wound that has high infection risk. [1] Infected ulcer may result
in wet gangrene ==> Putrefaction (bacterial aided decaying) separates the affected
toes.

Diabetes itself predisposes atherosclerosis that impairs blood circulation. Lack of

blood flow to the foot gives symptoms of pain, numbness, slowed down wound healing.
This is called peripheral artery disease.[2] If untreated, it ends into critical limb
ischemia where resting pain, and tissue loss starts. Cell deaths occurs and dry
gangrene develops. Seperation of the toes can occur if dry gangrene has developed the
line of separation (autoamputation).

Below is what a gangrene looks like on the toes.

Footnotes
[1] http://www.diabetes.org/living-w...
[2] Peripheral Arterial Disease (PAD)