The easiest way to think about overdrive is to associate the word “overdrive” with the phrase “real big gear.”
Once you establish that mental picture, any confusion goes away. Overdrive means you are using the biggest gear in your transmission to turn the wheels, at high speed. Because a big gear has more metal teeth on it than a smaller gear, the big gear has to turn less (fewer RPM’s) to maintain the same speed as a smaller gear.
So, when you’re driving at a higher speed, it would stand to reason that you will get better fuel economy because you are being powered by a bigger gear that is spinning less. Overdrive lowers the engine’s RPM’s, and that saves gas and wear on the engine. Overdrive is best for long, flat stretches of highway. I always kick into overdrive when I know the road ahead is not hilly and I will be able to drive uninterrupted at high freeway speed, and I’m not towing or carrying an extra heavy load.
You can also simply leave the overdrive switch “on” and this will happen automatically. I recommend overdrive for speeds of 60 MPH or higher. When should you NOT use it? Never use overdrive when you are driving in hilly areas, towing something, or travelling very slow. You could actually damage your transmission if you do. Remember, a big gear has to turn less to maintain the same speed as a smaller gear. So, at higher speeds the big gear is doing its job, pushing you effortlessly along a long flat highway at a steady high rate of speed, and saving you gas while doing it.
But when you’re travelling at slower speeds or stopping and starting or going up and down hills or towing a car, it’s less about point-and-shoot high speed travel and it’s more about having quick power to accelerate, or being able to navigate through hills or mountains, or being able to safely tow a heavy load. At a lower speed, the big gear would turn less and less and lose its efficiency over the smaller gear.
You would then need to shift into a lower gear to generate enough RPM’s to provide power to the wheels. If you didn’t shift into a lower gear, you’d quickly feel the bigger gear struggling to power the wheels and the RV would vibrate and lurch. You should never use overdrive when you are driving under these more stressful conditions. I leave overdrive off and manually flip the switch to “on” when I travel on long stretches of flat highway.