Overdrive is good for Highway and any flat constant speed road. As well as an interstate which is whats best. YOu don't want to use it on backroads with hills and sharp turns and stuff. It won't hurt the car short term, but in the long run it will. That is just extra strain on your transmission shifting in and out of those gears so often. If you are on a backroad keep it off.

another question, my overdrive light is burned out, how easy is it to replace?

Yes, keep it off with the hills as you won't wear on your tranny too much. As far as the light goes, its more time consuming then a pain in the butt. Taking apart the dash is the worst part. I'd suggest a chilton manual.