Loosely, the overtake button provides a temporary increase in the rev limit of the engine. There'll be lots of other stuff changing too (ignition advance for example) but that's the gist of it.
The official line on this rev "increase" is an audio syncing issue and since this statement has been made by the FIA/FOM or whoever manages the onboard footage now, this is likely correct. They have no reason to state otherwise (an yes, it happens on more than just the Ferrari and more than just the KERS cars).
Regarding the gearboxes, they're all using seamless shift boxes based on either Zeroshift technology or Weismann technology. The rules specifically state that drivers must "select" gears (i.e. no auto shifts) although they may preselect a further gear (6th to 4th for instance).
Dave
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