The overdrive button is used to lock out 4th gear (overdrive). It actually cycles a relay which cuts the power to your overdrive solenoid on the transmission and turns ON the yellow light on the dashboard (the UP arrow).
You can use it at any time. You can drive about 80 mph (130kph+/-) in 3rd (i.e. OD off)- watch the tach. You will get truly poor mileage at that speed!
One push of the button turns OD off, another turns it on. If you have trouble with it, it's often the relay either failing or not making good contact in your fuseblock. The relay is the tall one all the way in the right front (farthest under the dashboard) on the fuseblock. You can just reach it with fingertips when you havethe ashtray out. It ought to click noticeably with the key on, any time you cycle the switch.
As for generally poor mileage, check the condition of the big air hoses to the intercooler. Any holes at all, replace them (not cheap unfortunately).
Rob Bareiss, New London CT