Shifting into 4WD from 2WD can be done while driving, I think 62 mph but I NEVER do it that fast maybe 20mph because I go easy on my old truck. Switching from H4 to L4 or from L4 back to H4 is done at a complete stop with the car in nuetral.
I personally believe L4, (low 4 wheel drive gear) is harder on the transmission than H4 (high 4 wheel drive). H4 can be used around town, on the highway, wherever. It is good to use all the time. I use L4 sparingly, and I use differential locking extremely sparingly as I believe it is a lot of stress on the drivetrain. I also never change any of these modes in a turn. I personally think that if you abuse low and diff lock you will end with an expensive bill, again that is just me personally.
2004 owners manual;
"SHIFTING BETWEEN “H2” AND “H4”
(UNLOCKED)
To shift from “H2” to “H4” (unlocked),
reduce the vehicle speed to less than 100
km/h (62 mph) and turn the multi−mode
control switch knob fully clockwise.
If the four−wheel drive indicator light continues
to blink when you operate the multi−
mode control switch knob from the “H2”
to the “H4” position, this reminds you that
the transfer mode is not securely in “H4”
mode. Drive straight ahead while accelerating
or decelerating.
If the four−wheel drive indicator light continues
to blink and the buzzer sounds
when you operate the multi−mode control
switch knob from the “H2” to the “H4”
position, this reminds you that the transfer
mode is not in “H4” mode. Stop the vehicle
or reduce the vehicle speed to less
than 100 km/h (62 mph). Operate the
switch knob again.
To shift from “H4” (unlocked) to “H2”,
turn the multi−mode control switch knob
fully counterclockwise.
This can be done at any speed.
If the four−wheel drive indicator light continues
to blink when you operate the multi−
mode control switch knob from the “H4”
to the “H2” position, this reminds you that
the transfer mode is not securely in “H2”
mode. Drive straight ahead while accelerating
or decelerating, or drive forward or
backward in a short distance.
If the indicator light continues to blink
even if doing so, contact your Toyota
dealer as soon as possible. There may be
a trouble in the four−wheel drive system.
CAUTION
Never operate the multi−mode control
switch knob if the wheels are slipping.
Stop the slipping or spinning
before operating.
SHIFTING BETWEEN “H4” (UNLOCKED)
AND “H4” (LOCKED)
To shift between unlock and lock
modes in “H4”, push the center differential
lock switch.
SHIFTING BETWEEN “L4” (UNLOCKED)
AND “L4” (LOCKED)
To shift between unlock and lock
modes in “L4”, push the center differential
lock switch.
SHIFTING BETWEEN “H4” AND “L4”
To shift from “H4” to “L4”, bring the
vehicle to a complete stop with the brake
pedal held down with your foot, shift the
automatic transmission selector lever into
“N” and push and turn the multi−mode
control switch knob fully clockwise.
To shift from “L4” to “H4”, bring the
vehicle to a complete stop with the brake
pedal held down with your foot, shift the
automatic transmission selector lever into
“N” and turn the multi−mode control switch
knob counterclockwise"