In 2nd gear and 2 Position

Hydraulic pressure is applied to the 2nd clutch, then the 2nd clutch engages the secondary shaft 2nd gear with the secondary shaft.
The mainshaft 3rd gear drives the secondary shaft via the countershaft idler gear and secondary shaft idler gear.
The secondary shaft 2nd gear drives the countershaft 2nd gear and the countershaft.
Power is transmitted to the final drive gear, which in turn drives the final driven gear and the transfer drive gear.
The transfer output shaft drives the transfer hypoid drive gear/shaft and the transfer output shaft (hypoid gear).
Hydraulic pressure is also applied to the 1st clutch, but since the rotation speed of 2nd gear exceeds that of 1st gear, power from 1st gear is cut off at the one-way clutch.

Fig 1: Power Flow - In 2nd Gear And 2 Position
Courtesy of AMERICAN HONDA MOTOR CO., INC.