I cheated a bit and grabbed info from about.com for you (below). I'm not an expert at off-roading but I can give you a bit of my experience first, before the about.com stuff.
1) 4L is only for low speed, grinding over the hard stuff or going up/down steep hills. I've never used it above 2nd gear. If I can go faster than I need to go in 2nd gear then I'm sure I can switch out of 4L.
2) For my area, desert, I rarely use 4H locked. I'm either on trails in regular 4H or in 4L. I switch out of 4L as soon as I can.
3) As long as I don't think I'm going to get stuck, hurt myself or the H3, I like to leave it in regular 4H as long as I can. My Jeep buddy leaves it in 2WD as long as he can just to see how far he can go before putting it into 4WD.
4) I like turning off the traction control in the sand so the wheels can spin and I can fly around. It turns off automatically for 4L but turns back on again as soon as you go back to 4H (if it was on before).
5) Can't help you with the locking diff-I don't have Adv. package. (Told you my info was limited!)
Tips & Advice For Using High-Range vs Low-Range The gearing options found in 4WD vehicles help a vehicle tackle many of the unique situations encountered while driving off-road. Following are a variety of conditions in which you would want to use 4WD to avoid sliding or spinning:
Hi Range 4WD
4H allows you to drive full speed, if necessary. The high range ratios in 4WD mode are the same as the gear ratios in 2WD.
When to use 4H: (my note: this would refer more to 4H locked for us. If regular 4H is working, why switch out of it?)
[ul][*]for traction when the area isn't steep[*]when stuck in sand[*]extremely slippery conditions[*]snow[*]ice[*]rocky, gravel roads[*]gullies[*]extremely muddy areas[*]ridges [/ul] Low Range 4WD
4L is for creeping along at slow speeds. It reduces the strain on your vehicle, just remember to stay below 25mph in low range. While it does not provide more traction, it does provide 2-3 times more torque at about 1/2 or 1/3 of the speeds in high range.
Low range gear ratios are approximately half that of high range.
When to use 4L:
[ul][*]on wet, slippery surfaces[*]passing through sandy areas[*]on rough trails[*]through shallow water[*]rock-climbing[*]climbing steep hills[*]through mud[*]descending steep hills [/ul] Additional Tips:
-Don't change gears in the middle of a water crossing, going up or down hills, or in sand dunes.
-Be prepared: Engage low-range 4WD before you need it.
-Don't operate 4WD on hard dry surfaces.
-When in doubt, use a lower gear!