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4wd - locking transfer case in the middle. Best for off road.

AWD - clutch packs. Best for nasty conditions on road, IMHO.

^ this. 4wd is used on offroads and locks all wheels together, transfering equal power to all wheels. AWD varies power using different technologies, from a simple Haldex that transfers power back when front wheels slip to complex sensor controlled individual wheels. Some are front-biased (generally but not exclusively cheaper ones), some are rear-biased (mainly in sports cars) and some are true AWD, depending on the needs and expected pricing of the vehicle.
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