Most of the responses are pretty close, so just to summarize...
When OD is on (this is the default setting that your car will be in when you start it up), the computer will try to upshift as much as it can in order to increase mpg. (higher gears means lower rpms, means better gas mileage). So, most people prefer to keep it on all the time. It also especially makes sense for highway driving, since it will shift into 4th gear at cruising speed.
When OD is off, it won't shift into higher gears until much later. This is essential when you need to keep power and/or you want to avoid shifting a lot. So, when going up and down hills or "racing" on city streets, it will help to have it off. Then the
tranny will not be "fighting" you trying to shift into higher gears (which drops rpm and hp). **Note: even with OD off, when you reach high enough rpm in 3rd gear, it will still shift into fourth -- somewhere around 85-90mph, I think.
*steps down from lecture podium*

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YELLOW JACKET = 1998 Chrome Yellow V6
POWER: BBK CAI, TB, UDPs; Bosch Platinum +4 plugs
BEAUTY: black projector headlights, taillights, and mesh grille; 5% tint; shorty antenna; interior billet
ROLLERS: XXR 006 black spoke with blue lip; 18x8.5 & 9.5; BFG KDW/2 245/40R18 & 275/35R18
DRIVER: Jonathan, 6'2, 190 lbs
RIDER: my wife, 5'4 brunette hottie

and my 1st baby on the way...
