AWD can function in many manners; I will call upon my experience with Subarus to explain two of them. Both involve a center differential. The first method simply makes said differential a limited-slip differential; that is, if the front or rear wheels slip, the differential will lock and power will be shared between all four wheels. The second method involves a computer and a hydraulic center differential. When the computer senses traction loss in the front or rear (this is, either set of wheels moving faster than the other], the computer instructs the hydraulics to transfer available power to whichever wheels aren't slipping. The second method is obviously more effective, but is also more massive and complicated (ie, mote points of failure). There are other methods of driving four wheels, these are but two.