  We analyze the small-scale clustering in "MegaZ-LRG", a large
photometric-redshift catalogue of Luminous Red Galaxies extracted from the
imaging dataset of the Sloan Digital Sky Survey. MegaZ-LRG, presented in a
companion paper, spans the redshift range 0.4 < z < 0.7 with an r.m.s. redshift
error dz ~ 0.03(1+z), covering 5,914 deg^2 to map out a total cosmic volume 2.5
h^-3 Gpc^3. In this study we use 380,000 photometric redshifts to measure
significant deviations from the canonical power-law fit to the angular
correlation function in a series of narrow redshift slices, in which we
construct volume-limited samples. These deviations are direct signatures of the
manner in which these galaxies populate the underlying network of dark matter
haloes. We cleanly delineate the separate contributions of the "1-halo" and
"2-halo" clustering terms and fit our measurements by parameterizing the halo
occupation distribution N(M) of the galaxies. Our results are successfully fit
by a "central" galaxy contribution with a "soft" transition from zero to one
galaxies, combined with a power-law "satellite" galaxy component, the slope of
which is a strong function of galaxy luminosity. The large majority of galaxies
are classified as central objects of their host dark matter haloes rather than
satellites in more massive systems. The effective halo mass of MegaZ-LRG
galaxies lies in the range log_10 (M_eff / h^-1 M_sol) = 13.61 - 13.8
(increasing with redshift, assuming large-scale normalization sigma_8 = 0.8)
for corresponding number densities in the range n_g = 5.03 - 0.56 x 10^-4 h^3
Mpc^-3. Our results confirm the usefulness of the halo model for gaining
physical insight into the patterns of galaxy clustering.
