From BMW.Com,
The BMW all-wheel drive system, xDrive, ensures your BMW has the best possible traction at all times, enhancing agility and keeping you safely on track, even on fast bends.
xDrive is the permanent all-wheel drive system from BMW: under normal circumstances, it distributes driver power between the front and rear axles in a 40:60 ratio, and changes this figure variably when the road surface or overall driving conditions change.
Acting virtually instantaneously and a manner so subtle as to be go virtually unnoticed by the vehicle’s occupants, xDrive can direct up to 100% of drive forces to one axle. Enabling the driver to start up effortlessly even on slippery surfaces or steep hills, xDrive routes all power to the axles with the greatest traction. When parking, the system reacts to the need for high manoeuvrability at low speed by opening the clutch completely so the powertrain functions optimally.
At the first sign of understeering, drive power to the front axle is reduced. If oversteering is detected, xDrive directs more power to the front axle. Thanks to this dynamic redistribution of power, vehicle stability returns to normal even before the driver notices anything amiss.
Driving on a winding road or taking a fast bend in dynamic style is particularly enjoyable with xDrive: you feel as if your BMW is being guided along the curve. xDrive ensures that none of drive power is wasted on a loss of traction: every kilowatt of power is effectively brought to bear on the road.
xDrive is regulated by Dynamic Stability Control (DSC) and uses information from the latter system’s sensors to monitor road conditions. In addition, brake force courtesy of DSC is used when there is traction difference between the two sides of the vehicle and wheel spin is likely.