The transfer case is a central part of your vehicle's drivetrain. It's responsible for sending power from the transmission to the front and rear axle.
The transfer case is essentially an auxiliary transmission, but it works differently than a regular one. It has two input shafts that connect to the transmission—one on each side—and an output shaft that relates to each axle (front or rear). It also has a chain or gear set, depending on your vehicle, that transfers power from one input shaft to another.
Most modern transfer cases are designed to be locked together with a center differential, which allows them to send torque from one side of the drivetrain to another without splitting it between the front and rear axles. The center differential makes sure that both wheels are constantly receiving equal amounts of power, regardless of which way they're turning or how fast they're going around corners.