SOURCE: I have the light up
That means that the center differential is locked, making it 4-wheel drive, but restricting the tightness of turns that it can take. You should not operate it on dry pavement or above 45mpg in C DIFF LOCK mode or it could damage the car.
To turn it off, drive it to a level spot, stop, and press the button to turn it off. Drive a few feet forward and wait for the tone to go off. If necessary, put it in revers, drive backward a few feet and then go forward. That should turn the tone off and the light.
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