The Esc is my 2nd AWD SUV (Honda Element is my first AWD) after owning a 4x4 truck before. As I understand AWD vehicle drives normally in 2WD and it automatically engages to AWD "only" when traction control system detects different wheel speeds between front and rear via viscous coupling system at the transfer case. And I saw this in action. My wife pulling up our boat/trailer at a slippery ramp and I was watching (after hooking up the boat to the trailer), the rear wheel slipped not even a 1/4 turn and then (I suppose) the front wheels got engaged immediatgely and the truck pulled up the boat/trailer no problem. Also, I drove a mile long 12" of fresh snow packed slightly up-hill dirt roads NO PROBLEM - I was very impressed with AWD.
There is no push-button to manually engage from 2WD to AWD on my Esc - I wish it does, nor it has Hi or Lo as it did on my 4x4 truck. For serious off-roading and trail riding, you really need to get a 4x4. But so far, as for what I need, AWD has been working just fine for me.