Actually, it can work quite well. It's just VERY picky. I have 4 tires that are spot on on my BII and no working 4x4 indicators. I have forgotten it was in 4-hi and driven to work on dry roads without noticing several times.
There is also a viscous coupler in the AWD t-case, to allow for some slip, but that doesn't make is a center diff. And those couplers like to burn up.
The 4x4-auto is better, but almost as dumb. It's t-case doesn't have a viscous coupler, and if one of the wheel speed sensors dies (happens often when the wheel bearings go, and that happens often as well) it assumes wheel slip and locks in 4x4. I have seen several Explorers towed in over bad wheel speed sensors because they couldn't be driven. The people thought the front end or the trans was about to blow up.