It is a 2wd and 4wd all at the same time!
Basically, it runs 2wd (on the front) and then if the traction disappears on the rear then the 4wd comes in to drive the rear axle to gain traction (assuming the tyres are up to it)
It works hydraulically and most of the time you won't know its there except for when you turn onto your driveway and if the fluid needs replacing you'll hear a clonking noise