You have an actual limited slip differential. There are mechanical clutches inside that lock, or nearly so, the differential action when you have wheel spin. The clutches work automatically and there is no electrical component to them to turn on and off.
The rest of us have open rear with a traction control system that applies the brake on the side that is spinning to send torque to the opposite side. The switch on the dash is to turn it on and off.
What we can't understand is why Toyo calls it an LSD when it is NOT and why there are apparently 3 modes of operation. From what I can tell there is "normal" which should involve some level of "limited slip", "LSD On" which involves some other level of limited slip, and "off" which may or may not mean the system is truly off.
Now, as smart as all of that may sound, let me be clear, I have no ****ing idea what the difference is. I have a 4.0 Pre-Runner auto '15 with the dash switch. With an empty bed and on a wet road from a dead stop I can spin the tires equally regardless of what light is displayed on the dash. I was determined to figure all of this out one night in a parking lot and I finally gave up. No matter how I set the button, no matter what was displayed on the dash, there seemed to be no difference in the amount of wheel spin.
On normal cars with traction control, you can feel the breaks modulate when the tires spin. When you turn the TC off, you no longer feel the breaks thumping away. On my Taco, I have no idea what it is or is supposed to be doing.