I've been told that it puts the truck in AWD: it sends power to the other wheels when one starts slipping. 4HI locks all 4 into turning at the same rate, regardless of traction conditions, or the speed of each wheel. My understanding is that Auto 4x4 is what you should use on pavement, on account of it won't grind the tires when you're turning. Theoretically, this makes it "safer" than using 4HI, because the tires aren't made to lose traction by being forced to turn at a rate other than what the ground speed would indicate.
I've had it on 3 work trucks & 2 personal SUV's, & I like it fine. I don't know if it's a huge selling point, but it seems to work pretty well.
FC
Love the feature have it on my 2004 and it does what you just said.
