The O/D button switches the overdrive feature on and off. Only available in cars with automatic transmissions, overdrive determines whether or not the car engages the highest gear.
When the driver presses the O/D button, the car actually turns off overdrive but lights up the O/D indicator. As such, when the O/D light is on, it indicates that the car locks out the highest gear. Because the highest gear produces less torque than the second-highest gear, it is a good idea to turn overdrive off when going uphill, overtaking another car or towing a heavy load. On the other hand, overdrive improves fuel economy and reduces engine wear.