whats the difference between over drive and gear 3? when should i be using each of them?

In an automatic 4th gear is overdrive and 3rd gear is direct drive or drive. The only time you should ever need to use any gears below 4th is when you are traveling down hill over long distances and you are picking up speed. Like when you are coming down a mountain (Colorado Rockies), putting your vehicle into lower gears is called engine braking. It uses more gas but it will keep you at a safe speed on downgrades without overheating your brakes. The powertrain control module takes care of everything. You can drive in whatever gear you want but if you want the best mileage on normal roads leave it in overdrive.