Every 4WD uses a transfer case to split the drive coming from the transmission into two outputs: one directed to the front wheels and one directed to the rear wheels. Most 4WDs that we are familiar with are two-speed versions, having a High-range and Low-range gearset. All-wheel-drive (AWD) designated vehicles also use a transfer case, but these normally have only a single gear range (High) and lack the slow-speed capability of a two-speed transfer case.
A 4WD transfer case can also be classified as being a full-time or part-time unit. On a part-time transfer case, the front and rear outputs are tied together. It is not a good idea to operate this type of transfer case in 4WD on dry pavement or other high-traction surface. As your vehicle turns a corner, the front and rear tires will travel different distances and cause the drivetrain to bind. A full-time transfer case has some means of allowing slip or differentiating between the front and rear outputs to allow for on-road 4WD.
The High range on a transfer case is most often a 1:1 ratio. That is to say that for every revolution of the transmission output shaft, the front and rear transfer case outputs rotate one revolution. Factory Low-range ratios can vary from about 2:1 to about 4:1. This means that the road speed in Low range is reduced to a quarter to half the speed as opposed to being in High range. With this reduction in speed, we gain an increase in torque by the same factor. This is a great advantage when trying to turn big tires up against an obstacle.
Transfer cases have come in both geardrive and chaindrive versions. Typically, a chaindrive 'case is a bit quieter, but a geardrive 'case is most often stronger and does not suffer from chain wear, which requires periodic replacement. Usually, a factory set-up transfer case will allow you to choose four drive options when in use: 2WD High range, 4WD High range, 4WD Low range, and Neutral. 2WD Low range is usually not an option due to its anticipated rare use and the fact that 2WD Low range can place a lot of torque on the rear axle only and it is possible to break the drivetrain in this mode if used without discretion.