AWD transfers power from the wheels that slip to the wheels that grip. This might be both front end or rear end or one on both.
4 lock does just that. It locks both the front and rear together making both move. This is much better for slippery conditions. Use only for slippery conditions!
4 Low is for extreme conditions and VERY slippery conditions.
Here is some great info in the 1sr generation section and technical terms. Although this is a little different there are many similarities.
Transfer Case
Part time, Full time, and AWD Transfer Case explanation
http://www.dodgeforum.com/m_574544/tm.htm