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Another way to explain it is that it's like the crank gears on your old 10-speed bike. The rear gear has 5 selections, and the front has two, giving you 10 speeds total. The numbers of teeth are calculated to give you relatively even drops between them.
The external OD can theoretically be triggered in any gear, in effect giving you an 8-speed box instead of the stock 4-speed one. However, due to the number of teeth used in each of the two gear selections in the OD box, it isn't very useful with 1st or 2nd. It sounds like it could/should be useful in 3rd and 4th, though!
....Oh, and to be clear: Technically the term "overdrive" simply means that the output shaft is turning faster than the input shaft. That can be done inside the gearbox (as most modern cars do) or with an add-on box, like the Laycock-De Normanville one we're talking about now. Because they hadn't figured out how to package 5 real gear sets in a transmission at the time, and using an external box to step up the RPMs even further was a viable alternative. Nowadays, they know how to fit as many as eight (so far!!) gearsets into a single housing, so the external OD isn't needed. For a while, you could find some literature mentioning "double overdrive" five-speeds, because the top two gears were both overdriven. Now it just seems to be assumed that at least the top gear (or sometimes more) have a ratio lower than 1:1, so nobody really uses the term much.
-soD
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