Overdrive is 4th gear, plain and simple. It's called overdrive because it's .694:1 ratio means that the engine turns slower than the output. 3rd is direct drive 1:1, and second and first are 1.545:1 and 2.785:1 respectively.
Overdrive should be on in most cases, as evidenced by it being on by default. Turn it off when conditions dictate, read here for info:
http://www.automotiveforums.com/vbul...ad.php?t=58732