One of the major software feature addition in Windows Phone Update 3 is Driving Mode, which is designed to reduce distractions when in a car or other vehicle. Driving Mode is automatically triggered when the phone is connected to a pre-defined Bluetooth accessory (e.g. car kit).
The Windows Phone Blog post describing Driving Mode notes that it is "designed to limit notifications on the lock screen—including texts, calls, and quick status alerts—until you're safely parked".
Driving Mode can also be configured to send automatic replies to people who call or text you while driving, so that you can let them know you are "behind the wheel" and will get back to them as soon as possible.
More on Windows Phone 8 Update 3 (GDR3)
We covered the key new features and updates added by Windows Phone 8 Update 3 (GDR3) in our original news story. The update will start being delivered over the air to existing devices next month. However, developers and interested consumers can get early access to the update through the Windows Phone Developer Preview Program.
In terms of the consumer roll out of the update HTC and Samsung devices are likely to get Windows Phone 8 Update 3 first. Nokia's Lumia devices will get the update a short time later, a result of Nokia's plan to include a number of its own updates and enhancements alongside the Microsoft update (i.e. as with the Lumia Amber update, Nokia will be delivering a significant firmware update on top of the Microsoft update).