it means your automatic transmission will use all of its gears UP TO 3rd gear, so if your going down a hill, and you dont want to use your brakes all the time, (like going downhill on a mountain pass) you can use engine braking to slow the car down by putting the shifter in 3. you can go slower still by putting it in 2, or 1. you have to be off the gas pedal to do this, and the engine RPM will rise when you do it.
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