Transfer case

A transfer case is a part of the drivetrain of four-wheel drive, all-wheel drive, and other multiple powered axle vehicles. Typically a transfer case is used to engage (and disengage) the four-wheel drive function. When disengaged, most four-wheel drive systems operate in two wheel drive (engaging just the rear axle and wheels). For that reason two-wheel drive vehicles do not need a transfer case. 
The transfer case transfers the power from the transmission to the front and rear axles by means of drive shafts. The transfer case synchronizes the rotation of the front and rear wheels so they turn at exactly the same speed. It usually contains two or more sets of gears. It has a 1:1 ratio drive (usually called high range) for normal city and highway use. Then it contains a low range gear for off-road use. A common low range gear ratios is 2.72:1. That means for every 2.72 rotations of the transmission output shaft, the transfer case will turn both driveshafts 1 rotation. The Jeep Wrangler Rubicon model uses a 4:1 low range gearing.
Drive types.
There are two different types of internal power-transfer mechanism found in most transfer cases. 
Gear-driven.
Gear-driven transfer cases use sets of gears to transmit power to the front and rear driveshafts. These are generally strong, heavy units that are used in large trucks. There are currently gear drive cases in production for light trucks and SUVs.
Chain-driven.
Chain-driven transfer cases use a chain to transmit power to the axles. Chain-driven transfer cases are quieter, lighter and less expensive to manufacture than gear-driven units. They are used in vehicles such as compact trucks, full size trucks, Jeeps and SUVs. Some off-road driving enthusiasts modify their vehicles to use gear-driven transfer casesto gain the extra strength they provide.