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It is not an LSD per se but an open differential which in its nature, always tries to send power to the wheel with the least resistance which is well, the one with the least traction.
What BMW tried to do here is to have the DSC brake the wheel that's spinning the most (least resistance) and cause it to have more resistance to turn than the wheel that isn't spinning so power is sent to that wheel, it isn't an LSD because you're braking the wheels to control power going to them instead of controlling where the differential sends power through the differential itself without slowing you down.
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