VSC should be used for normal highway driving (2wd) but where rain or ice etc make it possible to skid or completely lose traction on 2 or 4 wheels. It has worked exceptionally well this winter in the PNW. Lots of compact snow and black ice.
LSD turns on when you shut off VSC with a first push of the button. LSD is used primarily 2wd when you might need to rock the vehicle or get traction while accelerating. VSC would want to shut down engine rpm and apply direction control braking. You don't want VSC working in mud, sand, etc. It'll work against you and the truck. Plus it has a noisy little alarm that goes off and scares you @#$$^&.
At the point where you get stuck or feel engine revs go down (when you are gassin' it), stop and push to engage LSD. 2wd LSD pushes you very straight and very far.
I only needed 4x4 to go thru very deep drifts and long pulls.
When you go to 4wd H or L, VSC is shut off by the switch, automatically, and both of your axles work somewhat like a LSD. It behaves similarly to a differential lock on older 4x4s driving power thru all four wheels, but becuase it is electronic and pretty well designed it should not use the hp that locking the transfer case does.
It's pretty slick. So far all three systems have worked well for me...once you figure out what they'll do!
The only thing I added was four 70lb sand tubes over the rear wheels for better traction.