How the system works? HA!!! Advance Trac is a VERY complex system... probably just as complicated as a system you'd find on a space ship. lol. Ever since I put the lift on my truck my advance trac has been a night mare, the system simply was designed to work ONLY with the stock suspension setup. (In case you can't tell by the link that swshawaii posted above, haha) Even the teeniest little change will set the system off. When I was running my stock shocks with the Truxxx spacers, the system was bad. I figured because it had more body roll with the lift. So I got the Rancho's hopping it would fix it only because they are adjustable and you can stiffen them up for the street. And did that work? NOPE! Oddly enough the system flips out more when the shocks are stiff (less body roll) then when the shocks are loose.
Freakin weird...