O/D stands for Overdrive, its main function is:
Generally speaking, overdrive (OD) is the highest gear in the transmission. Overdrive allows the engine to operate at a lower rpm for a given road speed. This allows the vehicle to achieve better fuel efficiency, and often quieter operation on the highway. When it is switched on, an automatic transmission can shift into overdrive mode after a certain speed is reached (usually 70+ km/h [43+ mph] depending on the load). When it is off, the automatic transmission shifting is limited to the lower gears. For an automatic transmission, it is almost always best to select overdrive and allow the transmission to control engagement of the overdrive. (It may be necessary to switch it off if the vehicle is being operated in a mountainous area or when towing a trailer.) With a manual transmission, overdrive should usually be selected when the average speed is above 70 km/h (approx. 43 mph).
Source: Overdrive (mechanics) - Wikipedia, the free encyclopedia)