Craig has done an excellent job of explaining torque, RPM, and why lots of people end up building a rig with totally incorrect gear ratios for the kind of driving they're expecting to do. "Lugging" happens when an engine is unable to accelerate when the throttle is opened wider because the torque the engine is developing can't overcome the drag caused by the weight of the vehicle, or the steepness of the hill it's trying to climb, etc. At that point, the driver needs to select a "lower" gear to get the engine back into the proper torque range to handle the load. Today's modern automatic transmissions with 8, 10, or more speeds allow the computer to figure out the proper level of RPM and torque to make the engine run most efficiently for the operating conditions and select the proper gear to keep the engine in its desired torque band. The person driving a manual transmission vehicle has to do that by experience, or "seat of the pants" driving, and it's easy to engage the wrong gear for the conditions at hand.
My father had a favorite saying- - - -"automatic transmissions are smarter than all drivers, and most mechanics!" That was true back in the 1950's and 60's when he was providing us kids with a place to live and food to eat by being the first guy in Nashville Tennessee to work on automatics, and it's definitely true today. Manual transmissions are entertaining toys for the guy who just has to do something with his right hand while driving other than scratch his personal equipment, but they're not the best at keeping the engine in the proper RPM and torque range.
A transmission with two overdrive ratios available where the driveshaft is turning faster than the engine will lend itself to overloading and lugging the engine down very easily. Don't go too "high" with the rear end ratio (numerically low, like 3.08- - - -2.73, etc. ) or you'll end up with an engine that's almost always running too slow to develop enough torque to pull the load. Performance (and gas mileage) will suffer terribly!
Dang it! I just fat-fingered a key on my laptop and erased two paragraphs! I was explaining how something as simple as changing the height of the rear tires on my daily driver (a Ram 1500 that gets 1k+ miles a week in several states) made a huge difference in being able to keep the transmission from constantly shifting in and out of OD and keeping the torque converter locked in. It also keeps me from getting speeding tickets, as the former 2K RPM "sweet spot" for cruising with the taller tires was 75-80 MPH! Now it's 65-70. I also get better gas mileage with the engine turning a little faster and staying in the proper torque band more of the time without being lugged down.
Jerry