Shannow is correct. Technically, OD is a transmission gear beyond 1:1. In practicality, OD is a marketing gimmick left over from the late 1970's. Years ago, like back in the 1950's, OD was an optional feature put in cars to gear down the drivetrain, and save gasoline for sustained high speed driving.
During the 1970's, gas became incredibly expensive. People (and manufacturers) were scrambling for ways to save gas. The manufacturers incorporated an OD gear into their 4-speed products, and capitalized their marketing on the memories of people who remember OD as a way to save gas. In reality, with the OD the differential was regeared, and the final gearing to the wheels in top gear was actually the same. The only savings was the 4-spd over the 3-spd, which gave better city cycle gas mileage.
I was a student engineer at Ford manual transmission back in 1978. I remember they took their stock 4-speed transmission, reversed the 3-4 shifting pattern so 3rd gear became direct drive, regeared the 4th gear to OD, and regeared the differential. Nothing was changed with the 1-2-3-4 gearing with respect to the final ratio to the wheels, but Ford could now advertise that they have OD in the manual transmissions.
Besides the marketing gimmick of the time, regearing 4-speed transmissions to OD - both manual and automatic - have an advantage over the traditional last gear as direct drive. They could build the transmission into a smaller package.
The down side of OD as final gear is that there is a nominal 4% energy loss of transmission across the gearing, which you do not have with direct coupling as final drive.
