From BMW Tech
Instead of a 40-60 (front-rear) power split (which pre-millennium four-wheel drive BMW's exhibit — BMW 325xi, BMW 325xi, early X5) with braking applied to individual wheels via DSC (Dynamic Stability Control), xDrive provides the same power split between the front and rear axles through use of a multi-plate wet Clutch located in the Gearbox on the output to the front Cardan shaft. This setup allows xDrive vehicles to modulate torque split front to rear. If wheel slip was detected by the ABS/DSC computer, xDrive will react, often before the driver ever knew of its intervention, to ameliorate traction and control of the vehicle. The wet clutch is applied through a high speed electric Servo motor turning a cam shaped actuator disc.
xDrive is networked with the ABS and DSC systems. In the case that wheelspin or directional instability still occurs while xDrive is or has been modulating the torque split, DSC will brake independent wheels to regain traction and improve directional stability. Its intervention is transparent to the driver.
The front and rear differentials in xDrive vehicles are an open differential design.