AWD systems like this Subaru's provide tremendous traction but suffer from higher drivetra
Dynamic drivetrain losses, on the other hand, include the rotational inertial losses from angular acceleration occurring within the drivetrain while accelerating. In fact, during acceleration there are losses from the rotational inertia of spinning transmission and differential internals as well as driveline components like driveshafts and prop shafts, but also from the increased load and friction being generated between the gears within the transmission and differential(s). And as you already know, with increased friction comes increased heat (more on that later)
It's important to understand the difference between steady-state and dynamic losses because SAE net horsepower, as reported by the auto industry, is measured in a steady-state condition. What this means is that the horsepower rating for your vehicle doesn't take into account dynamic losses that occur during acceleration. However, when you strap your car to a chassis dyno to measure its engine's output, the test is conducted at wide-open throttle and power is measured by the speed at which the dyno's rollers are accelerated. This means that drivetrain losses from rotational inertia and increasing friction, drag and windage are at work and will reduce the peak horsepower reading at the wheels.
This simple illustration highlights (yellow outline) some of the major sources of drivetra
Within the drivetrain itself, the primary loss sources are the differential and final drive, with further losses stemming from within the transmission, and in the case of AWD vehicles, from the transfer case. Within the transmission, as much as 30 to 40 percent of power loss can be attributed to the pump, with the clutch contributing another 20 to 25 percent. The rest of the loss within the transmission comes from seal drag, gear meshing, bearings, bushings and windage (drag on the gears caused by the gear oil). However, when dyno testing in the direct drive (1:1) gear, power is delivered directly through the mainshaft of the transmission, so the only loss sources are windage, friction and drag, resulting in total at-the-wheel losses as low as 1.5 to 2 percent, according to the published data.
Differential losses tend to be considerably larger, especially in the case of RWD and AWD vehicles where the torque path is turned 90 degrees as it enters the rear diff and exits it toward the rear wheels. In the case of hypoid-type gearsets (where the gear tooth profile is both curved and oblique) that are commonly used in RWD differentials, losses in the 6 to 10 percent range are the norm, while loss from the driveshaft(s) and prop shaft(s) tend to account for about 0.5 to 1 percent of total loss, depending on how well they're balanced and how many the vehicle is equipped with. In the case of FWD vehicles, the torque path is more direct to the front wheels and the use of efficient helical final drive gears means that drivetrain losses can be as much as 50 percent lower than on RWD and AWD vehicles.