A contribution to the forum
This forum has helped me on my 4runner journey and I want to give a bit back. Several people have done a good job describing these systems but I will give my attempt as well since there is a lot of confusion. Driveline engineering is one of my favorite things to think about since it took me the longest to understand.
1st off, ATRAC/MTS is not the same as TRAC. TRAC is your traction control system that is interested in keeping wheels from spinning while ATRAC/MTS is concerned with keeping wheels moving at the same speed across the axle. To keep the explanation getting to complicated I will just use ATRAC with the understanding that MTS is supposedly a more advanced form of the same idea, (in my experience MTS seems like an unnecessary complication to the ATRAC system).
A LOCKED differential-Is the easiest operation to visualize as in function; it is like a broomstick with wheels on either end, in other words it is impossible for one wheel to turn faster or slower than the other since they are connected. Our lockers are selectable in that they can be turned off or on.
An OPEN differential is what our 4runners have front and rear, (those with a rear locker act as an open differential unless the locker is engaged). In this system both wheels across the axle get the same amount of torque across the axle. While this sounds like the same as a locked differential it is not even close in operation. While it is this open differential system that allows you to turn a corner without binding the inside wheel like a locker, it is also the reason in a low traction scenario you have a single wheel spinning while the other sits there doing nothing. The thought experiment to see why this is happening is imagining a scenario where in 2wd one rear wheel is on solid high traction rock and the other is in the air, even by an inch or two. Because the wheel in the air has no traction it takes a relatively small amount of torque to turn, eg 10 lb/ft. The problem is that 10 lb/ft is not near enough to turn the wheel on the ground with traction since it now has to move the entire weight of the vehicle by itself. You can spin the wheel in the air faster and faster but because the torque is the same you will never get the wheel on the ground to turn.
Enter ATRAC. In the above scenario the ATRAC system will begin to apply brake pressure to the wheel in the air. This increases the amount of torque needed to turn that wheel say from 10 lb/ft to 70 lb/ft, (just an example actual torque is variable based on available traction and other factors). Since the torque is the same across the axle, the wheel on the ground also gains more torque, ideally enough to overcome the weight of the vehicle and move the vehicle forward. Again remember the purpose of ATRAC is not to stop the wheel in the air from spinning, but only to make sure the wheel in the air and the wheel on the ground both move at the same speed.
Obviously the example with a wheel in the air is the extreme example and when the differential in traction is less the system still works the same way.
Because someone will ask does ATRAC work when the locker is engaged? The answer is yes but it has no practical effect on the locked axle since it is already turning both wheels at the exact same speed. What it will do is allow ATRAC to benefit your front wheels while your rear is locked.
Hope this helps someone and I will add another post with a few touchup things such as LSD and MTS.