Just plopping this text here from Lotus7 that was noted above for easier reference. Seemed handy.
Quote:
Originally Posted by Lotus7
TCC: There is an electronically operated clutch in the transfer case that controls the amount of torque that goes to the front wheels. It can be set to "couple" power to the front drive-shaft at anything between 0% and 100% of available torque while the vehicle is running. If the rear wheels begin to slip, the transfer case clutch torque setting is increased and more torque is sent to the front wheels (reducing the torque at the rear and stopping the rear slippage). If the transfer case clutch is engaged, the front wheels cannot "freewheel". No battery = no electronics = no TCC = front wheels free to roll.
Park Mode: Although the transmission selector "Park" mode "brakes" the rear wheels, it is not actually a brake. Pressing the "Park" button on the gearshift lever OR shutting off all vehicle power engages a mechanical park "pawl". The "pawl" is a metal pin that drops into a gearwheel connected to the transmission output shaft (which is always connected to the rear driveshaft) that prevents it from turning. The park "pawl" will engage automatically when no power is applied. Ignition COMPLETELY off (second button press) OR dead battery= transmission locked = rear wheels locked. It's just like a older car with a mechanical park position on the gearshift, it will stay in park. When parked on a hill, the E-Brake should be used to hold the vehicle (and the front wheels turned to the curb), not just the transmission "Park' mode which will stress the transmission if used alone.
E-Brake: The Electronic "Emergency Brake", operated by the "pull/push" switch on the console behind the gearshift lever (often called the "Parking Brake") actually is a real braking system. When the E-Brake switch is actuated, a powerful electric motor operates mechanically to pull two metal cables that are coupled to the rear wheel brake calipers. The brake pads are engaged mechanically through the calipers. You can feel the brake pedal drop as the cables reduce hydraulic pressure in the rear calipers by mechanically pressing the pads. The motor is used to engage the E-Brake cables and is used again to dis-engage them. If the Brake Hold is on (green light), the E-Brake (red light) will automatically engage when the car ignition is shut off. The rear-only E-brake will remain in whichever state it was in when the power was removed. A dead battery will not apply the E-Brake if it was previously off, but without battery power, the E-Brake will not operate either. E-Brake only can lock the rear wheels.
Because of the transfer case clutch, the center differential will not explode if the vehicle is moved a short distance (enough to get it onto a flat bed truck) with the rear wheels elevated at low speed. It's effectively disconnecting the front drive-shaft, but not the rear drive-shaft. Even if the vehicle is in "Park" the front wheels are free to rotate (but NOT the rears). However, if the rear wheels rotate when in "park" (transmission park mode - not E-Brake "Park") the transmission will be likely be damaged.
In Neutral the park pawl is disengaged and the vehicle can roll with no damage, but ONLY if the ignition is on, ONLY if the E-Brake is off, and ONLY if there is battery power.
Sorry it's so complicated, but BMW designed it, not me. 
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