The torque converter locks when the engine rpm (impeller/housing speed of converter) and the transmission input shaft (turbine speed of converter) are roughly equal -- thereby improving efficiency for cruising, but also mitigating any torque multiplaction effect of the torque converter. With the TC locked, the engine is effectively directly coupled to the transmission input, and no longer uses a fluid drive.
This is controlled by the transmission control module (TCM), and usually is only activatd in top gear, and at steady cruise (low throttle position).
In some cases (my '95 Bronco, I think), this can happen in 3rd and 4th gear. In some cases (my '95 Bronco for certain), this can be defeated with a switch, and a light comes on (mislabeled "OVERDRIVE" in my opinion), which is useful when towing heavy loads and some converter "slip" is warranted.
Any input from the accelerator decouples the TC friction clutch, and the transmission reverts to a fluid drive scenario with torque multiplication. This also occurs while shifting (if any), as such a shift would be very harsh wihout the fluid damping effect of the TC. So in most vehicles, a downshift to 3rd would uncouple the TC clutch. I'm not aware of vehicles that lock up the TC clutch in lower gears, as this wouldn't make much sense. Lifting the throttle usually commands the transmission into the highest gear (for fuel efficiency) unless your TCM has a "sport" mode or some such that holds it in gear longer.