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Originally Posted by Rattlesnake Guy
Question for the experts. We have two Ford Expeditions with tow packages. Can someone explain what the overdrive on off function actually does? I know it is supposed to be off when towing and on when driving but does it do more than prevent me from going into the highest gear on the highway? If I am pulling the boat up the launch ramp at 1 mph, does it matter if the switch is on or off? 
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It makes no diffference at low speeds and simply locks out overdrive like you think it does.
I was told by a friend that used to own a transmission shop to use the "O/D off" function whenever driving below 50 MPH or when towing. He also said when towing to ALWAYS shift (up or down) on a lifted throttle. This means that if I'm about to climb a hill that I'm reasonably sure will require 2nd gear at some point, I should manually downshift to 2nd before I start the climb. I have followed his advice and it has proven to be great. My 11 year-old Durango has 120,000+ miles with lots of heavy (7400 lbs) towing on the original transmission with no issues. Dodge transmissions have a pretty bad reputation for short lives.
It might seem kinda brutal to drop into 2nd gear and rev to 4000 RPM to maintain highway speeds up long hills, but it does not hurt the engine at all. It's not any different than the loads a boat engine sees.