There is an additional "Hold" feature that is likely enabled. It remember the last state after restart. So if enable it stays enabled. What you are describing is exactly how it behaves.
If I don't use 93 octane my ENGINE lugs when the transmission is in a higher gear than needed for the speed.
If I ever have a TRANSMISSION lug I'll fix the transmission or dump the vehicle.
Uh. transmissions do not lug. ;-)
That is not all it does. It changes the behavior of the AWD. In normal mode the rear tires are basically not involved except for just taking off. You can accelerate at 40 MPH and the rear tires get no power.
In slippery mode the rear gets power every time you accelerate.
You can overcome the...