I'll start with the simple answer and let others build on it from there.
Fistly DSC is just a bunch of electronics and sensors so partially switching it off does not create any form of LSD. LSD usually requires a special diff gear set or clutch pack to allow one wheel to spin up to a certain amount faster than it's counterpart
As far as I'm aware there are 3 settings on DSC, normal, single press of the switch and press and hold while turning the ignition on
Normal is full nanny mode and using sensors calculates driver intention, wheel spin, change of direction and does all sorts of horrible but safe things like cutting engine power, applying brakes on correct wheel to prevent understeer, oversteer, etc. and helping the aged around the corner.
switching off merely reduces it's influence so letting you get the tail out a bit, not cutting the engine power, etc.
Fully off lets you be much more wild and allows wheels to spin, and more easy ditch entry, however I believe even in the fully 'off' mode it can still cut in when it says 'enough' and truly senses a crash