How does this logic level converter on the Adafruit HUZZAH work
Whenever the 5V device transmits, it pulls the bus down, and the diode conducts to 0.5~7V, when it releases or pulls the bus UP to 5V, the diode blocks the current from flowing, and a resistor on the 3.3V device should pull the bus on the 3.3V side back to 3.3V.

Whenever the 3.3V device transmits, the "HIGH" (about 3.3V or a bit less) is supposedly inside ATMega328's specs for VinHIGH (3.0V to 5V) and the "LOW" is inside the VinLOW threshold (1.5V to 0V).



p.s.: the risks that I can see are having problems with the bus if ESP VoutHIGH is not high enough, if the diode is not fast enough or if the resistor is not strong enough to pull the bus in the speed you need. I dont think any of these will risk burning the ports though..