All the ect snow button does is lock out first gear. I never use it.
I -think- your 05 is similar to my 06. Three open differentials, traction control via ABS.
Did you get any dash lights?
As Ralf says ECT prevents the wheels spinning and digging the car into snow and mud. It does this by starting in a higher gear or similar ie. less power going to the wheels. I was disappointed also when I learnt it wasn't some sort of "super" mode to get the car out of trouble.
The Highlander isn't a proper 4WD in that the differentials do not lock. Actually a proper 4WD will also have an extra set of "low range" gears to give it more power at low speeds to get up that steep and rocky hill (or keep it in check going back down that steep and rocky hill).
There are open (standard), limited (LSD), and locked differentials (and probably lots of versions in between as all this is new to me also). Differentials serve to prevent premature wear of drivetrain parts.
With an open differential all the power goes to the spinning wheel while the one with grip doesn't get any (good for tarmac but bad for snow/mud). Now if you lock the differential (proper 4WDs have a locking mechanism) half the power is diverted to the wheel which wasn't moving and setting it to work so your car becomes twice as capable. Keeping it very basic a limited slip differential (LSD) is in between.The CV and CVX Highlander uses a viscous LSD. This uses a an expanding liquid pushing plates together within the diff in certain conditions. While the plates don't lock (eg. for a 4WD) they slip less because of the friction of teh plates being pushed together.
This is an extremely basic description and there are many reasons for having an open, limited or locked differential dependent on where and how a car is driven. I'm still learning all this and I trust a more knowledgeable person will correct my explanation if it is incorrect.
Note; the CV
and CVX (edit - 19 Dec 22 - seems the CVX can have VSC as an option meaning no LSD - see later post) models have limited slip differentials (LSD) while the Grande model uses open diffs with traction control via ABS ie. the car applies braking to the spining wheel so power is diverted to the other. You can have 1, 2 or 3 diffs (front, centre and rear). I'm in Australia so the North American Highlanders may have a slightly different setup.
You can replace your open or LSD differential with a locking one to make it more offroad capable. It is an expensive exercise though -
RAV4 Highlander Diff Elocker
I recall a forum member (Lowlander) being on a mission into the depths of Siberia to source an LSD(?) for his earlier model Highlander which didn't have one.