The only short story I have ever read, which is entirely in dialogue and without dialogue tags, is "Tennis" by Michael Arlen. It is a back-and-forth discussion between a man and a woman, and Arlen had the skill to pull it off. But many writers, including best sellers, write dialogue in a single voice often not much removed from the narrative, so it becomes difficult to work out who's saying what by the words alone.
Recently preparing an ebook for the library I spent quite a lot of time sorting out a section of dialogue without tags. The problem occurred because one character was given two short successive paragraphs, while all the rest of the untagged dialogue was single paragraph for each speaker, so the reader was trapped into something that made no sense. I had to reread several times, and go right to the end of the section of dialogue, to work it out. At one stage I was thinking some lines of text had been left out. Then, to avoid confusion in the readers in future, I took an editorial decision and merged the two short paragraphs into one. I'm still not sure if the split was on the part of the author, or the newspaper serial syndicate, or the linotype operator who set the material.
To see what a writer with an ear for speech can do without dialogue tags, try Pratchett's Discworld, notably when the original three witches are embroiled in debate.
Granny Weatherwax, Nanny Ogg, and Magrat are marvellously differentiated not only in appearance, and character, but in speech as well. You can never mistake one for the other.
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