AWD is for on-road use. Each tire rotates at its own speed.

4WD is for off-road use. All tires rotate at the same speed.

That's incorrect. To have "All tires rotate at the same speed." you need 3 locking mechanism, which very few vehicles do.

At this point, the distinction is gone, because car bards marketing.

(AI something lies)

I've thought through the "all tires rotate at the same speed" thing before and how it works mechanically (front differential, rear differential, transfer case) and I think in the "no differentials locked" condition the correct statement is: the sum of the front wheel speeds == the sum of the rear wheel speeds. So you can have your front wheels slip and the rear wheels can still get power, or you can have your rear wheels slip and the front wheels still get power, but if you have one wheel in the front and one wheel in the back that are slipping, you're hosed.

Re: the 3 locking mechanisms comment, in typical 4WD configurations the transfer case in 4H/4L is essentially locked (which is what makes the above sum front == sum rear condition). AWD transfer cases can be more flexible there; some essentially act as a 3rd differential and result in all four wheel speeds being essentially decoupled (for better or worse, easier to get stuck) while others actively control the front/back locking with clutches or hydraulics or whatever.

That's incorrect. To have "All tires rotate at the same speed." you need 3 locking mechanism, which very few vehicles do.

The "locking mechanism" known as traction works pretty well most of the time and has the nice side effect that it only wears an easily replaceable consumable when you break it.

All tires don't rotate at the same speed even in 2WD, otherwise you wouldn't be able to turn without slipping.

For offroad use, you want all wheels to be locked to each other. Otherwise one wheel without grip will allow all other wheels to remain unmoving. You're right that you don't want this behavior for onroad use, which is why the differentiation (and the differential) exists.

AWD is an automatic 4 wheel drive when required.

Think of it more like it's going to be 2WD most of the time, but when there is low traction (such as ice) the 4WD will engage.

4WD is a permanent thing, or at least always on when you engage it.

I don't think that's universally true

Indeed. Marketing ruins all definitions.

I don't think most people here have it right. From my understanding the main difference is that 4WD can be manually turned off (meaning going to 2WD mode). AWD is always on.

Some AWD systems might intelligently change power to different wheels (or front and back) and that might vary per brand and model. 4WD could also do this. Usually with 4WD you might also have a 4 lo and 4 hi gear as well.

Then there's also various types of differentials and locks and whatnot which is a whole more detailed discussion.

The RAV4 dynamically engages the back wheels with no mechanical coupling to the front wheels. It uses a separate electric motor in the back. Toyota calls it AWD.

[delayed]

Clutch pack vs transfer case.