Basics:
2wd: power goes to the rear wheels only (in a rear wheel drive vehicle; to the front wheels in FWD vehicles).
4wd: power can go to 4 wheels; 4-LO transfer case is included.
AWD: most (if not all) power usually goes to 2 wheels; if there is slippage, then power will be directed to 4 wheels.
For example, a Camry or Accord is 2wd (both are front-wheel drive). BMW 325/330i are RWD (all power goes to the rear wheels). 4runners also come in 2wd models (cheaper than 4wd models).
4wd 4runners come with a transfer case (the "dial" on the dash). For V6 models, you can run in 2wd mode (like a car). You can also run in 4wd mode (by turning the dial to 4WD). When in this mode, power is directed to the front and rear wheels. 4wd 4runners can also be put into 4-LO (LOW range), which multiplies your engine torque (power). This 4-LO mode is mainly used for off-roading or can be used launching your boat.
In V8 4runner models, there is no 2wd mode. It is ALWAYS in 4wd. It also has a transfer case to shift into and out of 4-LO.
AWD do NOT have a transfer case...thus, it cannot be shifted into 4-LO mode. Examples include Acura MDX, Volvo XC90, BMW X5, Honda CRV, most AWD cars, etc.. However, in these systems, if there is slippage, power can be directed to 4 wheels. Thus, these SUVs/cars are good for all-weather driving, but are not suitable for off-roading.
Hope this helps...it's actually kinda confusing when you get down to the details of each vehicle.