How to operate the shift system for the four wheel drive feature

With that system you can shift into and out of 4X4 while moving. However, you do not want to use the 4X4 on any surface where you have good traction like dry pavement or hard surfaces, only on low traction areas like snow or sand.
To enter the Low Range you need to come to a stop, then select the low range button with your foot on the brake and the transmission in neutral. It should go from 2WD through 4WD and then you should hear and feel it as it locks into low. Driving in low range is for times where you need better control and power on poor traction surfaces. Do not exceed about 15 mph in low range.

Would you fill me in on the reasons for the caveat about 4WD on traction surfaces?

Because this is a selectable system and not a full time AWD unit it has no center differential. Without that item, on a high traction surface the tires would need to be all turning at the exact same speed all the time to avoid having torque forces build up in the differentials and transfer case. If you were driving in a straight line those would not be a problem. However, every curve or turn will make the tires rotate at different speeds. In 2WD this is not an issue as the rear differential can work as designed and the front tires are freewheeling. In 4X4 you are essentially locking all four wheels together. On loose sand, snow, wet grass, gravel the tires can slip and scrub and basically do the job that a differential can do. On clear pavement however or if you are turning tight the tires will not slip. Instead you get torque wrap which can very easily break parts. Normally the parts that fail are things like the transfer case, U-Joints or hubs. All of those are expensive.