I thought it was important which axle a car is towed by to avoid damaging the transmission. However, I have noticed a few RVs that tow a car behind it with just a straight hitch and the towed vehicle has all four wheels on the ground. Does the RV driver just put the towed vehicle in Neutral? And, if so, why doesn't a tow truck do the same for a towed vehicle instead of lifting up one end of the towed vehicle? Thanks for helping me understand this better.

 

Not all vehicles are able to be towed "4 down" with all 4 wheels on the ground.
Some automatic transmission vehicles need to be placed in neutral with ignition on "ACC" mode, manual transmissions in 4th or 5th or neutral and/or transfer case in neutral as well depending on the make.
Others cannot be towed "4 down" at all.

 

Depends on the car most of the time. A lot of older 4wd trucks with a shift lever for 4wd can be towed with all 4 wheels on the ground. There is a neutral position on the transfer case that disconnects the transfer case from the transmission and allows all 4 wheels to spin independent of the drivetrain. Older model Jeep Wrangler, CJ5/CJ7, Geo Trackers/Suzuki Vitaria/Chevy Trackers, Suzuki Samauri, all of those are great vehicles to tow behind an RV if you want to go 4 wheeling. They are all lightweight(important with an RV), small, and have a traditional transfer case you can pop into neutral. Plus they are all beasts off road.