I won't get this written in time, but here goes.
With a 205 or any part time case, when you put it into 4wd, the front and rear driveshafts are locked together.
So, if you try to make a turn on dry pavement, or drive a long distance, things bind up since some tires are trying to turn farther than others.
In 2wd, if you have hubs that will unlock and disconnect the axles from the hubs, then the entire front end does not turn. which reduces wear on the parts and the power it takes to turn all those gears is not wasted.
With yours, you basically have a differential inside the transfer case.
The front and rear are engaged all the time unless its in neutral. But, with the differential it lets the two drive shafts turn at different speeds.
In fact, one can turn at full speed while the other is as zero.
So, if you jacked up one end, the other would not pull you off the jack.
When you put it in lock, you bypass the differential in the transfer case and lock the shafts together like a 205.
With a part time kit, you do away with the differential in the case, and you replace that geared chunk you had to pull out to get to the wheel hub nuts with a locking hub.
Then, when you put it in 2WD, only the rear shaft turns.
BTW, Jeep really did have a better idea with their part time system when it first came out.
The differential in their Quadratrack transfer case was a limited slip differential.
So that if one wheel lost traction, the other three would still pull without having to put it in lock.