The transfer case serves two purposes. It splits power coming from the transmission to both front and rear axles thereby providing 4WD and, it provides an alternative lower gear ratio.
Transfer case gearing may be modified affecting only low range. This will greatly improve off road prowess while not impacting highway manners. Terra Manufacturing makes kits to lower the gearing in your transfer case for serious four-wheeling. For example they just introduced a 3:1 conversion for the Dana 20 providing your vehicle with a 50% better crawl ratio.
Conversion kits are sold for some cases that provide separate shift levers for hi/low and 2WD/4WD. This "dual stick" device provides access to a 2WD Low range.