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Overdrive changes the gear settings, as it causes you to shift to the next gear earlier than normal to save gas. OD off means there is no change in gears and you use all 4 gears like you would a manual, well almost anyways.
does it hurt my tranny or engine to switch in between on the fly?
example, like when on the freeway i'll sometimes do it to dig deeper in 3rd or second gear...
it starts on always, turn it off it just locks it out of overdrive and nothing else, with it off you stay in your 1:1 gear, wile with it on it goes into forth, or overdrive, wich is .70 to save gas