Here is diesel tuning in a nutshell (and these are generalizations but they hold true for most traditional turbo diesels)
Since there is no throttle, the intake is open to full atmospheric air all the time. At idle, the injectors are injecting just enough fuel to support idle operation. As you put more "foot" into it, the injector pump injects more fuel. As such, a diesel engine more or less operates between extremely lean at idle to borderline lean at full power. Soot and black smoke is basically unburned fuel that makes it out of the exhaust. Black smoke does not necessarily mean rich mixtures, it can mean late injection, poor efficiency, damaged injectors, or one of several things. But... since we're talking about a later, electronically-controlled diesel, we can rule out some of those things. Under normal operation, a 24v electronic Cummins doesn't belch black smoke thanks to efficient flame decks, accurate timing control, and good fuel atomization.
So, let's assume that the stock setup lets the engine operate between really lean up to a little bit lean at full power. Chips take advantage of the conservative factory tune and inject the extra fuel. Since there is still more air than fuel in the factory tune, giving it more fuel fills the gap without lapsing into black smoke territory. Also involved with that additional fuel is additional heat energy going through the turbo. In the case of some turbos (like early powerstrokes) there is no boost control other than the amount of exhaust, so increasing fuel increases boost. To an extent, in un-controlled turbos adding more fuel adds more air which allows you to add more fuel... etc. Of course you reach an inefficiency point with the turbo/intercooler which limits your streetability.
Other diesels with electronic or mechanical wastegates must be retuned to allow the extra boost or adding more fuel will simply create more black smoke and higher EGTs. For instance in the case of the Duramax you only have a small window to add more fuel at stock boost levels. After about 60hp you have to up the boost to get more air to go along with your extra fuel.
Basically, here's what you need to do. Small upgrades in fuel will give nice boosts to power. Keep EGTs in check and you'll be fine. If its a daily driver only, go ahead and juice it up a bit. An 80 hp chip should do fine on a stock truck. 100hp and more will require a careful eye on a pyrometer installed in the exhaust manifold. If you're going to tow with it, consider a better intercooler, a bigger downpipe, and a large-diameter exhaust to keep EGTs down. As a general rule, if you're going to get one of those switchable tuners that offer three or four HP levels, the hottest settings are fine for occasional street use, but a big no-no for towing. Upgrading intercooler and exhaust typically make the hottest settings fine on the street and OK for occasional light towing.
Its really pretty simple when you think about it. With gas you have to worry about VE and cam timing and all of the mechanics of how the engine ingests air. With diesel, that part is fixed. Its a simple matter of mass air vs. mass fuel. Increase the air and you can increase the fuel. Keep doing it until your pyrometer says stop. Then do things that reduce EGTs like exhaust and intercooler mods and add even more fuel. Your two biggest limiting factors are EGT and reliability of internal parts... and I guarantee you'll reach EGT limits before you even stress the guts of that Cummins. I have a link (on my other computer) to a dyno run of a 5.9 Cummins that makes over 1200 hp and 2131 lb-ft of torque AT THE WHEELS. Not kidding. Many Cummins owners are daily driving 5.9s that make 1200 lb-ft and 600+ hp at the wheels, so don't worry about the stock internals. You have a 360-cubic-inch motor that weighs nearly 1200 lbs. Its built for it
