I had specifically asked a question on How?When? to engage 4x4 and some basic 4x4 theory...I guess some people were too busy or not bothered to answer the question...So, in the greater interest of Pak'Wers I have found an excellent explanation...here it is
The H or L refers to High or Low ratio on the transfer box. H is for driving at normal speeds, L is for driving at slower speeds - mainly offroad. N is neutral - no drive at all.
Before moving onto the next stage, you need to understand that your car has three differentials. A differential allows a wheel to travel at a different speed to another wheel. You have a front diff (so the two front wheels can travel at different speeds to each other), a rear diff (same for the rears) and a centre diff - the centre diff allows the front axle to travel at a different speed to the rear axle - ie. the three diffs together allow each of the 4 wheels to travel at different speeds. This is essential when you're going round corners!
The second letter - (LL or HL) refers to the centre differential being locked. Normally its 'open' - with an open centre diff you can drive on road in 4x4 mode. all 4 wheels are receiving power. Unfortunately it only takes loss of traction on one wheel to stop the car from being able to move forward. this is because the centre diff sends power to the fastest axle and the axle diff sends power to the fastest wheel. this is what you call "full time" 4x4.
With a centre diff locked the front and read axles are forced to turn at the same speed. it now takes a loss of traction on 2 wheels to stop us moving forward - one at the front and one at the back. This is exactly what you need on a slippery surface, but if you try to drive in this mode on road you risk something called "windup". because tyres have high grip on tarmac surfaces it is more likely that the speed difference between the front and back axles around a corner are not going to result in loss of traction. this can result in enormous stress on your transmission and can damage or even break it. only use a locked centre diff on loose surfaces!
Your prado may or may not have a lockable rear diff (on a separate switch). This forces both rear wheels to travel at the same speed - so if you lock the centre and rear diffs you force three of your 4 wheels to move at the same speed - even better for getting you moving when you're stuck.
The Toyota Owner's club thread is here
How To Use 4Wd? - Toyota Owners Club - Toyota Forum