I have heard of it, but I can honestly say I don't understand how it works and what it accomplishes. I don't mean to sound ignorant, I have a good idea of what it is however I need confirmation.

 

http://auto.howstuffworks.com/differential.htm


A type of differential which transfers driving force to the wheel with the best traction.


a differential unit that uses some form of friction to limit wheelspin by sending more torque to the wheel with the most traction.

 

a standard open differential
power comes in from the input shaft (or pinion gear in the case of a rear dif) and is placed into the ring gear which in turn sends the power to the spider gears within the rear diff. These spider gears allow a wheel speed mismatch from one side to the other, unfortunately, they also will transfer all of the power to the unloaded wheel in the event that a wheel is in mud or off the ground.

a limited slip diff uses a clutch pack or bellville washers (effectively springs) to preload the diff that will force both sides to share power more evenly while still allowing the differential speed in tight corners.

here's a good link for a better discription...
(actually he beat me to it)