I just found out I have been driving around using my car's over-drive function incorrectly. Turns out most people do, according to an owner of a Diamond Certified Auto company. The reason it's confusing is that when the over-drive light is on, over-drive is off, and when the light is off, the over-drive feature is on! No wonder we're mixed up.
He says you should have the over-drive off (light is on) when you're driving around town and/or going up hills. This prevents the transmission from going into a higher gear unnecessarily and reduces wear and tear. The over-drive should be turned on (light is off) when you're driving on freeways. This is a good way to increase your car's fuel efficiency. For a further explanation on how the over-drive feature works, check your owner's manual. A better understanding will save you gas and extend the life of your transmission.