Originally, overdrive was an extra transfer case bolted onto the back of the gearbox, which would be selected separate to the rest of the gears (this was on both manual and automatics). Thus, the normal gearbox was still a "3-speed", but there was an extra overdrive gear added onto the rear. Over time, the overdrive unit got integrated into the transmission and the overdrive became just a normal gear. The reason why it's called overdrive is because it is a gear ratio less than 1:1 - ie the output drives faster than the input, hence "overdrive". In most 5-speed manuals and 4-speed autos, top gear is overdrive and the next one down is close to 1:1 (but not always, sometimes that second one is also less than 1:1). In more modern 6-speed manuals/autos etc, there may be more than one gear which is technically overdrive. The reason for the lockout button is so that the automatic transmission can be locked out of top gear to prevent it shifting in to too high a gear before the car is warmed up (or when towing). It is recommended to leave overdrive turned off when towing or climbing hills, to stop the tranny from "hunting" backwards and forwards between top and second-top gear, which puts a lot of stress on the transmission - better to force it to stay in a lower gear (same reason why there are the L/2 lockout shift positions too, for really low-speed stuff). In a manual it is not needed because you manually select all the gears yourself anyway. As for why it's a button and not just another notch in the gate will be a throwback to the old 3-speed transmission gates which were just L, 2, D, N, R, P. Since overdrive/4-speed boxes were often added extras on higher-spec models (especially if it's a bolt-on unit and not a new transmission), this would allow you to keep the same gate and associated linkages/valving across the range and just add a new shifter/button. Reduces parts needed (most likely the non-overdrive shifters had provision for the button with a blanking plate or the like), plus a lot of early automatics (especially US ones) were column shift and thus you want as few positions as possible (otherwise Park would be pointing straight up and L would be touching your knee).