The empirical scaling law, wherein the total photoabsorption cross section depends on the single variable eta=(Q^2+m_0^2)/Lambda^2(W^2), provides empirical evidence for saturation in the sense of sigma_{gamma* p}(W^2,Q^2)/sigma_{gamma p}(W^2) --> 1 for W^2 --> infinity at fixed Q^2. The total photoabsorption cross section is related to elastic diffraction in terms of a sum rule. The excess of diffractive production over the elastic component is due to inelastic diffraction that contains the production of hadronic states of higher spins. Motivated by the diffractive mass spectrum, the generalized vector dominance/color dipole picture (GVD/CDP) is extended to successfully describe the DIS data in the full region of x=<0.1, all Q^2>=0, where the diffractive two-gluon-exchange mechanism dominates.

7 pages with 3 figures,(eps files), Latex. Talk presented by D. Schildknecht at DIS2002, Cracow, Poland, 30 April to 4 May