Oil flows from out of tranny case and into Ujoint bell. There it lubricates the ujoint and the U-joint bushing, also known as the "okie" bushing. There is a seal at the back of the okie bushing that prevents oil from running down prop shaft into rear axle. That is one way to tell if your seal or okie bushing is shot, if your tranny keeps losing oil w/o external leaks, and suddenly your rear axle seals are leaking oil on the rear tires.
BTW, the okie bushing is a real cast-iron bee-atch to replace, requires a special tool and lots of patience. Personally I think the okie bushing is an alien plot to keep the mechanically inclined busy during the invasion. Make sure to screw your tinfoil beanie on when doing Ujoint work, and watch out for those little guys with glowing radioactive quarts of gear lube.
