Some trucks with manual t-case levers still have CAD or auto-hubs. But the new Dodges do not. Their manual transfer cases are an all manual 4wd system, no electronics (except for the little idiot light that tell you you're in 4wd).
As for what fails, I believe there was a TSB to correct the t-case from shifting itself into neutral and staying there under some circumstances, that was an ECM software problem. And then there's the dash switch, the wiring, possibly a relay, the electric motor, etc.
To put it in perspective though, there are still way fewer electronics on the t-case than in the engine, or automatic transmission. So it's more likely your vehicle won't start than you'll be stuck without 4wd. There have been a rash of 4wd related problems on vehicles, but those are case by case incidents having to do with crappy components (auto hubs on Fords, for instance), there's nothing fundamentally wrong with the concept.
(note: happy owner of a manual shift Dodge)