Its actually a pretty cool system:
"TCS/TC2
The Single Wheel traction control system gives you traction when you need it most. The system detects a slipping wheel and applies brake pressure to slow it down, it then takes the energy that would have otherwise gone to the slipping wheel and transfers it to a wheel that's not slipping. With this system, you could have as many as three wheels on a slippery surface (virtually no traction) and still get enough torque out of the fourth wheel to move the truck up a 10% grade.
The H2's base TCS mode is great for normal hard surface traction needs, like on-road use, off-road rock crawling or ice and snow. But once you hit a variable surface like deep mud, sand or gravel the TC2 takes over. The TC2 works just like TCS but allows limited wheel spin to help gain even more traction.
So with three transfer case selections, two rear axle differential selections and two modes provided by the TCS mode switch, you actually have a total of seven driving mode selections in the H2, providing you with the ability to match the performance of the H2 with almost any driving condition."
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