The use of D1, D2, D3 and D4 or sometimes L, 2 , 3 and D is the same as that of the gears from 1 to 4. On steep slopes, you can put the car on L/D1 and you won't feel you car losing power and it would drive smoothly. Similarly when you are in an area where only two gears are required, you can put it in D2/2 so that maximum power of the car remain in the first two gears.
Apart from that, they can benefit you in a race as well, as you can start your car in L and can take it to its limit and then move to 2. Do the same in 2 and move to 3 and so on...
4Matic is the All Wheel Drive system by Mercedes Benz which enhances traction of the vehicle as all of its wheels play a role.