There are four common ways to put an engine’s power (torque) on the ground:
Rear-wheel drive (RWD) connects the engine and transmission to the rear wheels via a central driveshaft that runs the length of the vehicle to a rear differential. RWD is preferred in sports cars and high-performance cars because the weight of the drivetrain is distributed more evenly front to rear, which improves handling.
Front-wheel drive (FWD) is more complex. The front wheels do double duty: steering and putting power on the ground. FWD eliminates the long driveshaft used in RWD, allowing a bit more interior room. Its also puts everything—engine plus transmission/differential (the transaxle)—under the hood, making the vehicle front-heavy. That’s good for traction on slippery surfaces.
Four-wheel drive (4WD) is more complex still, with two differentials, front and rear, and a transfer case to send power to all four wheels, providing abundant traction. Transfer cases typically have special low gearing that the driver can select when traction is particularly challenging—when off-roading, for instance.
All-wheel drive (AWD) is much the same as 4WD but is designed for lighter-duty, on-road driving. Typical AWD systems automatically distribute power to the front and rear axles as needed to give the best traction, without driver involvement.
To be sure, permutations of 4WD and AWD systems vary among automakers—automatic, permanent, full-time, part-time, and so on. The thing to remember is that 4WD/AWD is all about getting the vehicle to move (accelerate) on a slippery or loose surface.
Contrary to popular wisdom, 4WD/AWD does not improve braking—that is, bring you to a stop more quickly. Nor will it prevent your fancy SUV from sliding sideways into a ditch on an icy road. Indeed, a FWD car with winter tires may perform better on ice and snow than a 4WD/AWD car with all-season tires.
Adding AWD to a car that would otherwise come with FWD may mitigate torque steer (the tendency for a car to pull to one side under heavy acceleration from a stop), an annoying trait common to FWD vehicles.
More significant, there’s a relatively recent wrinkle called “torque vectoring” AWD. An elaborate system involving sensors and pairs of electromagnetic clutches, it can provide awesome handling benefits even on dry roads. Found mostly on high-end, high-performance cars, it’s making its way down the food chain to some Ford (Focus RS) and Nissan (Juke Nismo RS) vehicles.