When to Drive on D3?

Use D3 to provide engine braking when going down a steep hill. D3 can also keep the transmission from cycling between third and fourth gears in stop-and-go driving. For faster acceleration when in D3 or D4, you can get the transmission to automatically downshift by pushing the accelerator pedal to the floor.

Should I drive in D or D3?

As said earlier, the D3 mode is ideal to use for city driving. This is because you get higher RPM at lower speeds when your step on the gas pedal at third gear. Plus, you can use the D3 if you are about to pull to a high speed since you can rev a high RPM at third gear before shifting to the next.

Is it bad to always drive in D3?

Don't redline it for extended periods of time. But if you say, don't drive over 30 mph, then staying in D3 is ok. If you sense that its better if the transmission upshifts at a certain speed, then don't keep it in D3. It's not necessarily bad as long as you don't keep it in the red, your gas mileage will suffer.