any gear which has higher rotating ratio than the crank shaft, is called over drive gears, since for each rotataion of crank shaft, ur gear rotates more than once.
O/D ON OFF only engages dis engages these gears, thats usuallay the largest gear, in vitz, thats the 4th gear i beleive.
in some cars thr isnt any light when OD is ON, the light turns on only when u turn the OD OFF. ie, like a warning that ur OD is OFF, since ur SUPPOSED to keep OD ON all the time
u should keep the OD on all the time, in city or highway, it wont effect ur pick, but will engage 4th gear all the time when ur not pushing the car. just like u will do in a manual car.
turn OD OFF only when towing a car or some other heavy stuff, since ur at slow and constant speed. the auto tranny tries to shift to 4th gear, lowering the revs, losing all the torque, and losing speed, it will then automatically shift to 3th or 2nd to accelrate. to keep this shifting up and down to minimum, and not to confuse the transmission, u use this button.
u can USE OD OFF when going uphills and downhills aswell.
its like telling the car to drive in D3 instead of D.