It uses the speed sensor to operate the 4 wheel drive. I know that on mine Explorer in four wheel auto/high when the front and rear spin at different speeds the transfer case triggers an electro magnet that engages the clutches to lock in the front driveshaft. I remember Phil tell me something about this being in issue in the Chevy's and that they had a lot of them come in with the clutches wornout in the transfer case. In four wheel low on my Explorer the clutches are always engaged.
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