AWD means all 4 wheels are getting power all the time. With the GMT900 trucks, AWD units do not have a switch for the transfer case. I have a small, useless hole in the dash of my Denali where the transfer case switch is located in 4WD trucks. AWD trucks have a third differential, to allow for tight turns without tire scrub.
4WD means part-time/selectable power to the front wheels. When engaged, you don't want to go faster that 65, nor do you want to be driving on dry pavement. If you try to make a tight turn while in 4WD, you'll feel the powertrain start to bind and the tires will scrub.
ahh. so you don't even have the selector knob on yours, so it's true all time awd. I didn't know that was a thing for these years. and yours in the denali huh. wonder if it was an option or if mine got the difference tcase because it's the hybrid denali.
very interesting. I'm guessing the 3rd diff you're taking about is a transfer case with a viscous coupler?
I have the knob. I got the feeling from the reading the owners manual there was one that had the knob but without the option to put the t case in neutral, so it couldn't be a tow behind. maybe they were talking about your style with no selection. which makes sense not to flat tow that.