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In the 2012 Toyota RAV4, the LSD light doesn't signal a problem. It comes on when the VSC is turned off to assist in navigating through deep snow or mud. You can activate the Limited Slip Differential feature in tough weather conditions or off-road driving. When the VSC is off, the LSD can distribute power to the wheel with the best grip without reducing engine power like traction control does. To activate it, press the VSC "off" button. This action also deactivates traction control. The LSD light will flash, and it will only turn off if the brakes get too hot or if you turn the vehicle stability control back on.
The auto LSD light on a 2012 Toyota RAV4 means that a sensor has picked up on elevated transmission fluid temperatures.
I believed that the light in my car indicating "LSD" was for my limited slip differential.