These cams will allow the outer, faster-rotating wheel and its plate to overtake the middle plate. This is not a simple ratchet or free-wheel because, and this bit always seems like magic, the device also works correctly in reverse. I think this is due in part to the Disco's full-time 4wd. The twitchiness that you have heard about is generated by the power going to the inside rear wheel when the outside rear unlocks. About the only thing you notice is that it takes a little more pressure on the steering wheel to negotiate a turn.
Traction control involves no modification to differentials at all.
The idea is simply to apply the brake on any spinning wheel. This will slow it down and force torque to go to its opposite number which still has traction. Clearly the normal driving characteristics of the car are not affected. If you think about it, the side-gears can be of different sizes and apply different leverages to their respective output shafts. If it is engaged on firm surfaces it can cause transmission wind-up and rapid wear.