The term four-wheel drive typically describes larger passenger vehicles that may allow the driver to manually switch (sometimes with an automatic option) between two-wheel drive mode (if available) for streets and four-wheel drive mode for low-traction conditions such as ice, mud, snow, or loose gravel.

All-wheel drive (AWD) is most typically used to describe a "full time" 4WD which may be used on dry pavement. These systems must incorporate an inter-axle differential which allows the front and rear wheels to turn at different speeds. w This eliminates driveline binding, wheel hop, and other driveline issues associated with the use of 4WD on dry pavement. Because all 4 tires in a full time AWD system are connected by a system of differentials, they are potentially very susceptible to spin when a wheel loses traction. Without sophisticated traction control systems, they would become immobilized when any one of the four tires lost traction. A traditional part time 4WD system does not connect the front and rear via a differential, and therefore does not suffer any front/rear torque reduction—if a front tire loses traction, it does not reduce torque delivered to the rear tires, even without traction control systems.

Part-time 4WD systems are mechanically simpler and cheaper than AWD systems. Also, a part-time 4WD transfer case is usually equipped with a reduction gear setting, or, low range, which provides for higher torque at lower speeds, a vital feature for vehicles that will see much off-road use. In AWD systems a more expensive separate reduction gearbox is usually used. The main drawback of 4WD is that because it lacks a center differential, a part-time 4WD system can only be used in low traction situations where the wheels have the ability to slip as needed.