YouTube - How Differential Gear works (BEST Tutorial) (old promotional video from Chevy - watch this if nothing else!!)
And if you like check out some computer animations (BTW tons of these awesome mechanical animations on Youtube these days!! love them) :
YouTube - Gear Animation ( www.dizayn.tr.gg )
YouTube - diferencial catia
Okay, so an Open Diff is cool because it lets the wheels turn at different rates when you go around corners. The alternative back when that Chevy video was made was a locked rear axle with both wheels spinning at the same speed all the time, which would make the tires skitter badly around corners (BTW this is different than the "solid axle" that cheap American cars used to have (aka "live axle" or "beam axle"), which referred to the use of the drive axles as suspension, those cars still had differentials).
If you always had perfect tire traction to the road, an open diff would be perfect. Going around a corner, the outer wheel is easier to push and the inner wheel resists more, so the open diff spins it less, and all is merry. The problem occurs when you don't have perfect traction. In that case the slipping wheel has very little resistance, so the open diff just spins it like crazy and the wheel with traction barely moves.
The most obvious case where you would encounter this is on snow or ice when you get stuck - you hit the gas, and one of your wheels just spins and spins which the one with good traction doesn't budge. To address this for serious offroading, they make "locking diffs" which pushes in another gear to the differential which locks the two sides together so that the two wheels are forced to spin at the same speed. If your goal is to go forward in a straight line regardless of traction, a locking/locked diff is ideal.
The issue with racing and cornering is that going through a corner with power you will often lose traction due to the heavy combined load of cornering and accelerating. When that happens an open diff will basically refuse to put down power (it will just spin the loose wheel). An LSD will still put down some power if one of the wheels has traction, which will let you accelerate out of the corner quicker.
Traction Circles great video by the most boring race driver in the world.
And now you can read these :
BTW a decent AWD/4WD car will have an LSD of some kind between the front and rear wheels. See 4WD vs AWD for a good discussion.
Modern cars with open diffs use braking to limit wheel spin. Basically one wheel loses traction and goes nuts spinning, so the electronic traction control puts some brake on it, then both wheels feel resistance, so the open diff now gives power to both wheels which lets the one with traction move us.
The easiest way to make an LSD is just to take your open diff, put the whole thing in a box, and put some fluid in that box. Boom you have a viscous coupling LSD. (do not try this at home)