Good to know. So I can run "4WD" without any real penalty to fuel consumption unless the Sequoia determines that 4WD is needed?
NO ![Grin ;D](https://www.autos.ca/forum/Smileys/CarTalk/grin.gif)
Because we are going back in history here to circa 2002 I cannot be 100% of this without a pic of your tranny shifter. Your unit has Toyota's multi mode. It is not slip and grip and does not think for itself.
When the 4wd is NOT pushed in on the tranny shifter you are in rear wheel 2wd open diff. When you push the fackin button in you are permanently in AWD, still open diffs. Drive train will not bind however you drive. Throwing the little lever into 4 from N is your low range which is locked in first only, still open diffs. Can't remember if back then Tracs was a thing. If you have tracs then that attempts to regulate the open diffs with the brakes.
In 2002, the Sequoia had TRAC and VSC.....
And you almost have it right (if I'm reading correctly)
Transmission lever in any setting (except "L) + 4L = is low range, 4WD OPEN DIFF.
Transmission level in "L" +4L = is low range, 4WD LOCKED DIFF.