It's a 242 Transfer Case with Full-Time 4x4 as standard. In order (from the front) the settings should be 2WD, Part-Time 4x4 (High Ratio), Full-Time 4x4, Neutral, Part-Time 4x4 (Low Ratio).
You can shift between 2WD, Part-Time 4x4 (High Ratio) and Full-Time 4x4 whilst moving at speeds up to 55 mph. The logic behind this is that if you are in Full-Time 4x4 or 2WD, and need to shift to Part-Time 4x4, then you won't want to stop and lose momentum to do that.
To shift into Part Time 4x4 (Low Ratio) first STOP. Put the transmission into Neutral (NOT Park), take the Transfer Case through Neutral into Low Ratio, select the gear that you want, and proceed. If that doesn't work then try the above when rolling forward at 1-2 mph, as this sometimes helps.
When you select either of the Part-Time 4x4 settings the Yellow Light on the dash should illuminate. when you select Full-Time 4x4 then the green light will show. When you select 2wd then no lights will show.
Take a look behind the driver's sunvisor and you should find a sticker that explains this.
If I were you, I'd run in Full-Time 4x4 at all Times except when you are off-road. Then select the most suitable Part-Time setting. Fuel consumption in Full-Time will be marginally lower, but the handling will be a lot better.
Exercising the Transfer case by going through all the settings whilst drivng on a slippery surface will help. These Transfer Cases often get a bit sticky when they're not used for a while, but will generally losen up with use.
In case you're wondering, the difference between Part-Time and Full-Time is that Part-Time locks the axles together, and they will then turn at the same speed. This gives better traction in the slippery stuff, but makes it impossible to go around corners when on tarmac. Full-Time allows the axles to turn at different speeds, so you can go around corners on tarmac without the vehicle jumping all over the place due to axle wind-up.
