I'm too poor to own a fancy electronic tcase so I haven't had the opportunity to play with one yet

But on the manual cases there is a switch like this guy here on the top of the case
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When shifted into 4wheel drive the lever activates this switch on top of the tcase and energizes the CAD, this guy on the front axle. (Sorry for poor pic)
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The gen 2's worked in similar manner but the switch on top was vacuum actuated vs electrical, a vac line coming from the pump and a pair of lines going to the CAD on the front axle.
Gen 3 and early gen 4 didn't have CAD, and the driveshaft spun all the time.