Overdrive as the name suggests is like having one or multiple more wheel rotations at a specific engine speed. In simple language it helps the engine run at lower rpm(lower revolutions per minute) and helps you save the fuel.
When the system was put into production, then at that point of time overdrive had to be selected manually with independent lever. This was because of the relatively poor engine power. One can select overdrive only after hitting the highway and once he/she had build up enough speed.
As the technology changed overdrive came fitted in the gearboxes. Now the technology is so advanced that overdrive is selected electronically. The sensors detect the need for overdrive and even before you come to know overdrive would have been selected. You dont even feel. Now thats technology