Alright, parents who love/are forced to watch "Bluey," you might have felt a slight twinge in your soul when Jack's Dad needed some prodding from his daughter, Lulu, to understand that "all-wheel drive" means "the four wheels on this vehicle receive engine power." Be that as it may, the differences between all-wheel drive and four-wheel drive can sometimes be blurry and tough to articulate, even for seasoned car enthusiasts. Heck, BMW's U.K. website explaining the xDrive system reads, "4WD, all-wheel drive and 4x4 are all terms that are used interchangeably, but all equate to the same thing." Well, you may not want to take BMW's word as Gospel here, since the National Park Service will apparently cite you for using your AWD car on a 4WD-only trail.
Here's how the distinctions between AWD and 4WD are usually described. Typically, AWD is tailored for on-road performance. With full-time AWD, all four wheels are always driven, but the car automatically sends more power to whichever wheels need the most traction. With part-time AWD, the vehicle will switch automatically between 2WD and AWD depending on road conditions or to boost fuel efficiency, which is how the newer Mitsubishi "Eclipse" crossover operates.
4WD, on the other hand, is usually reserved for off-road driving and relies on a user-switchable central transfer case that lets the vehicle go from 4WD to 2WD. Often, 4WD-equipped vehicles also provide a high range when extra traction is needed, but speeds are still relatively fast, and a low range that maximizes torque when clearing stumps, traversing deep mud, or exiting a sandpit.
Jason Fenske of the YouTube channel Engineering Explained has an excellent visualization for the often-agreed-upon technical distinction between AWD and 4WD. With an AWD system, there's generally a center differential with a set of clutch packs that constantly vary the amount of torque going to the front or rear wheels. Some AWD vehicles, such as the upcoming sub-9-second quarter mile running 1,250-hp Chevrolet Corvette ZR1X (and E-Ray, of course), as well as the surprisingly gorgeous Toyota Prius Prime, rely on electric motors to drive the wheels the engine won't.
Meanwhile, a 4WD system's transfer case is usually an on/off proposition. When in 4WD, a transfer case is just sending power to the front and rear differentials equally, with no clutches whatsoever. It's a perfect system for off-roading because it doesn't matter if the tires rotate at different rates around a turn. They'll just slip slightly to prevent binding. But using that same 4WD system on pavement becomes a recipe for worn tires or driveline components.
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In that Engineering Explained video, Jason references the then-current F90 BMW M5, which is a legit 4WD vehicle with a transfer case that lets drivers select between 2WD (rear wheels only) or 4WD. But BMW put clutches in the transfer case for the M5, so it can still act like an AWD car and send different amounts of torque front or rear. Then there's the Porsche 959. Csaba Csere, former Technical Editor and Director for Car and Driver and MIT mechanical engineering degree-haver, calls the 959's system "4-wheel-drive," yet there is no 2WD mode in a 959. Road and Track also calls it 4WD.
959s do let drivers vary front/rear torque from 20/80 to 50/50, though, so maybe they get a pass as 4WD vehicles because of their user-selectability. However, everyone refers to the GR Corolla's cool system as AWD, and that lets users choose 60/40, 50/50, or 30/70 torque biases, so never mind. Then there's the Mercedes Geländewagen, specifically the G550, which features a 2-speed transfer case and user-operated switches to lock the center, rear, or front diffs. And yet, Mercedes refers to this system in its refrigerator box-shaped SUV with direct military roots, "all-wheel drive."
Okay, so, maybe Jack's Dad gets a pass on his confusion. Let's leave it like this: AWD typically drives all four wheels based on what the car's computer wants to do for on-road driving, and 4WD gives the user more options, including 2WD for driving on pavement and low/high range 4WD for loose earth only. Unless the manufacturer doesn't want to, or does something crazy like build a 6x6 (looking at you again, Mercedes).
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