I once had a Jeep Grand Cherokee that had a "full time 4WD" system. Basically you could choose between 4WD low (traditional 4WD with front and rear diffs locked to each other, in a low gearing for massive torque), 4WD high (traditional 4WD as above, in normal gearing), 2WD (front diff unlocked and spinning freely as if it were a regular 2WD car) and full time 4WD (front wheels would automatically lock together only if the system detected slippage in the rear, and would receive about 35% of the engine's total power output).
The funny thing was, even though you were supposedly able to drive in full time 4WD on dry pavement, it would sometimes engage the front diff in parking lots and when taking tight turns at low speed, causing the front wheels to hop. I ended up leaving it in 2WD unless I was on a dirt road or it was raining, figuring full time 4WD was a marketing gimmick to compete with Subarus.
From what I remember when I had to replace the transfer case a year after I bought it (it was a 1996 that I bought in 2006 and the previous owner abused it), it was more or less a "traditional" Jeep 4WD setup but depended on the transfer case to keep the front and rear axles independent until slippage was detected. I think it was pretty much fully mechanical, except for the auto locking front hubs. I believe Jeep's marketing term for it was Select Trac or something like that.
I think the issue was with the auto locking hubs; when it malfunctioned it would lock the front hubs together and in turn the transfer case would lock the front and rear diffs together, causing the wheel hop. This defect probably contributed to the death of the original transfer case, now that I think about it.
The funny thing was, even though you were supposedly able to drive in full time 4WD on dry pavement, it would sometimes engage the front diff in parking lots and when taking tight turns at low speed, causing the front wheels to hop. I ended up leaving it in 2WD unless I was on a dirt road or it was raining, figuring full time 4WD was a marketing gimmick to compete with Subarus.