Read the howstuffworks article and examine the diagrams they have until you understand it.
The device was invented to eavenly distribute the power to each wheel, AND allow the two wheels to spin at different speeds. (this is a requirement for turning, esp while moving slow and turning hard into a parking spot) The problem with the origional design was, if one wheel looses traction, EX: one wheel is on ice, the other wheel is on pavement, ALL the power goes to the wheel on the ice since it's the easiest to turn. The wheel starts spinning like crazy, and your car goes nowhere.
If you have a broken RC car, take it apart and crack open the little diferential it's got. Odds are, unless it's a really expensive RC car, it's an open differential like yours and you can play with it with your hands and really understand how shity these things are compaired to limited slip differentials, which combat the traction problem and allow you to do burnouts and drift
A quiafe differential is pritty cool to, it's a LOT harder to wrap your head around how it works because of it's complexity. ...and it does have one flaw that makes it unsiutable in certain situations, it's also got a bunch more gears and moving parts to break.