This is where things get a bit more complicated.
Most Japanese 4x4's (including the Vauxhall Frontera and Monterey) are part time 4wd. This means only the rear wheels have drive unless you select 4wd. The earlier A series Frontera's have a lever operated 4wd system. The later B series Frontera's have the Shift On The Fly (SOTF) button operated system.
Both are a means to an end really. The B series system is the most driver friendly (not necessarily mechanic friendly) as you can engage/disengage the 4wd as you drive, by merely pushing the button. The earlier A series system has to be done stationary (unless you have manually locking hubs).
The difference between 2 high, 4 high, and 4 low is as follows.
2 high: everyday driving, hail rain shine
4 high: used when the road is covered in ice and snow, and general off road conditions where the ground is slippery (like muddy fields etc)
4 low: extreme conditions where the terrain is difficult to negotiate and the ground is exceptionally slippery.
The difference between high and low range is in the gearing. This has nothing to do with the gearbox, but instead the transfer case bolted to the back of it. The transfer case is a box of cogs that takes the drive from the gearbox and engages the reap prop all the time. When you engage the 4wd it throws a bunch of cogs inside to engage the front propshaft which in turn drives the front wheels via the front differential. If you select the low range position on the second lever then a different bunch of cogs in the transfer case engage and this then in effect turns the wheels slower for the same amount of engine speed. This means you can get more delicate control of the driven speed and also more effective torque to the wheels meaning that you won't lose drive on steep slopes or really boggy ground.
This is a bit of a generalisation but for now hopefully start to explain how things work.
As a point of note Land Rovers are full time 4wd. This means that all four wheels are always being driven. They have a central differential that directs the drive front and rearwards all the time. This central differential allows LR's to cope with the difference in wheel speeds when cornering etc. When cornering the outside wheels will turn faster than the inside ones. However the front ones will also turn at different speeds to the rear ones (as only the front wheels turn into the corner and the rear ones will follow). This front/back difference is taken up by the LR centre differential. With a transfer case there is an even drive forwards and backwards meaning our 4wd systems will always force the front and rear differentials to turn at the same speed. Not a problem on slipperey surfaces as the wheels will spin to allow for issue when cornering. Not good on tarmac as the wheels will be forced to turn at different speeds due to the grip and then that will put torsional strain (we call it "wind-up") on the various axles/gears/C.V. joints etc until something breaks. Often however the steering will become heavy/solid and the truck won't go anywhere. It can be gotten rid off by jacking all four wheels off the ground and the wheels will spin untill the strain is removed.
Benefits of part time 4wd:
less bits being driven all the time so less wear
less bits being driven so more fuel economic
more direct drive to the driven wheels so better performance
if the transfer case stops working then the truck can still be driven as the rear prop is directly driven from the gearbox.
Cons of part time 4wd
cannot use 4wd all the time ... but if you don't need it why use it as you will get the benefits of the above.
Benefits of full time 4wd
you have that extra traction all the time which is useful if caught unawares by sudden ninja patches of ice
Cons of full time 4wd
if that centre diff fails you lose all drive
less fuel economic as you are driving the entire system all the time
less performance as differentials always sap power from the engine before it gets to the wheels (though diff-lock eliminates the loss by locking the cogs in the differential planet gears together meaning you get something more akin to a transfer case, however you cannot now drive it on tarmac in 4wd for the same reasons we have stated above)
Hope this helps.