[RojoRocket]

D J,
FSM states "Duty Solenoid C (Transfer) is mounted to the transfer control valve on the side of the extension case (far rear of transmission), and its duty ratio is controlled by the signal sent by the TCU. It then controls the transfer control valve for controlling the transfer clutch hydraulic oil pressure." It appears to basically control the amount of torque transferred to the rear wheels under various traction conditions.
"When DS3 becomes inoperative it turns OFF. This causes maximum oil pressure to be applied to the transfer clutch so that power is always transmitted to the rear axles. (Direct-coupling AWD)."
If you have ever driven a 4WD vehicle on dry pavement with the rear wheels pushing as the front wheels attempt to turn left or right, they cause a good deal of "judder" and wear on the front tires as they attempt to rotate while simultaneously being pushed forward, creating an "eraser" effect. A correctly performing AWD system incorporates a viscuous coupling or clutches that allow front and rear wheels to turn at different rates, preventing this "binding".
Hope that makes some sense. As far as accessibility, this is a fairly major job to undertake replacement, as in 3 full pages of instructions and diagrams in the manual. Subaruparts.com prices Duty Sol-C out at about $80.

Glenn