A transfer case transfers power from the transmission to the front wheels when engaged.
The engine delivers power through the transmission as in any truck. Attatched to the back of the transmission is a transfer case which either splits the power between the front and back axles(4 Hi & 4 Lo) or just delivers it to the rear axle (2WD). It can even step the gears down (underdrive) to multiply the torque and provide stump-pulling power (4 Lo). The engine power is directed through the driveshafts and into the axles. The differential splits the power between the two wheels and away you go. The front wheels are locked together, which is why you feel the front tires slip and/or grab on dry pavement in 4WD. The front wheels are moved by constant velocity (CV) joints which allow you to turn your wheels left and right while driving. CV joints are also used in front-wheel drive cars. In order to disconnect the front wheels from the front axle and transfer case, locking wheel hubs are used. These allow the front wheels to turn freely when not in 4WD and save you gas mileage and wear on parts. Wheel hubs and transfer cases can be electronic (push a button in the cab) or manual (move a shift lever and twist a knob). Electronic ones are more convenient, but break easier when components fail (mostly wheel hubs). Manual ones require more work, but are less prone to breaks and failures. Many newer 4x4's have the electronic system and use the ABS system sensors to engage the front wheels only when they are needed (automatic 4WD).
Good answer...except your ford does not have CV joints (I think some Chevys do). Both the DANA 44IFS (F150) and Dana 60 (F250/350) use plain old U-joints. They are not as free to turn on hard angles, so you can't turn as sharp as a 2-wheel drive and when you do they bind-up. That causes the lurching problem in tight corners. Its normal and will get worse as the truck ages, especially if you never use the 4-wheel drive. Also, your front wheels are not locked together, you have an open differential. Front lockers and limited slip axles cause contol problems and are not safe on the road.
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