No , its in 2wd until you choose 4wd. Your landcruiser is essentially the same as a normal older style car, except you have a transfer case that can engage the front diff with 2 choices of ratios.
H2 on your shift diagram is High + 2 wd
There is lots of good videos on youtube with diagrams,cartoons etc. Its much easier to watch something than have it explained purely in words.
We have something that is descended from the early days of 4x4.
Full time 4wd has its benefits but it also has to find a way of keeping the transmission from winding up from slightly differing speeds between the front and rear diffs.
This requires some kind of mechanical trickery or viscous hub, but it always means extra heat and friction.
Our part time landcruisers dont have to contend with this. Part time transmission is generally considered more heavy duty which is why its still used in large trucks. We can limp home on either the front or rear diff. Full time systems(I may be wrong) will need towing.