Hi / Lo stands for high and low range which means that in high range this is normal driving, in low range you have a lower range gear ratio, menaing you have greater pulling power up hills for example. If you go to low range 1st gear the vehicle travels very slow but has considerable more power to pull up hills or provide engine braking while driving down a steep hill, no need to use brakes.
Diff lock makes the left and right hand wheels of the same axle turn at the same speed, normal driving only one wheel drives per axle unless driving strainght ahead, this is called differential action, without this you could not turn corners. Only ever use diff lock in soft driving conditions, like mud, snow or sand, otherwise you will damage your axles.
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