My thinking on this question is that modern transmissions have enough gears and a wide enough overall spread that they incorporate a lot of the benefit that a two-speed axle would provide. For example, the GM 6L90 automatic has a 4:1 first and a .67:1 high with four gears in between. The new GM/Ford 10-speed has an even greater overall spread with a deeper first and taller high. Compare that to the old TH400 with a 2.5:1 first and 1.0:1 high with just one intermediate gear. If the two-speed axle isn't used for splitting (which was their primary purpose when paired with a transmission with few gears and big ratio jumps) it basically only adds one gear beyond what a single-speed axle would provide, either on the top or on the bottom depending on how it is viewed. The modern transmissions with 6 (or more) gears, a deep low-gear ratio, and multiple overdrives provide essentially the same thing all in one package.
Placing the entire spread of ratios in the transmission also has the advantage that all gears are available when 4WD is engaged, something that would be very complicated and impractical if the two-speed was located downstream of the transfer case.
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Today's Featured Article - Listening to Your Tractor - by Curtis Von Fange. Years ago there was a TV show about a talking car. Unless you are from another planet, physically or otherwise, I don’t think our internal combustion buddies will talk and tell us their problems. But, on the other hand, there is a secret language that our mechanical companions readily do speak. It is an interesting form of communication that involves all the senses of the listener. In this series we are going to investigate and learn the basic rudimentary skills of understanding this lingo.
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