Driving Mode is one of the best new features in Windows Phone 8 Update 3. It lets you configure your handset to limit distractions while you're driving in a Bluetooth-equipped car and optionally respond to those who try to text or call you. A glimpse at the future of automobile/smart phone interaction, Driving Mode is a key reason to consider getting Update 3 immediately.

Driving Mode is found in the Settings interface on Windows Phone 8.

The first time you run this app, you step through a wizard in which you enable Driving Mode.

First up is a set of options that determine whether Windows Phone will ignore incoming phone calls and text messages. If you do ignore these events, the people who call or text you will receive an automatic text message reply, which is described below.

If you decide to ignore calls and/or texts, you can configure Driving Mode to automatically reply via text message when such communications attempts arrive.

Driving Mode is tied to a particular Bluetooth device, which will typically be your car. In my case, the VW PHONE entry seen here is our Volkswagen SportWagen TDI, so I have chosen that device from the list.

(You can later add additional devices, which is handy if you drive more than one Bluetooth-equipped vehicle.)

At this point, the wizard indicates that you're done configuring Driving Mode. When you tap the Finish button, you're returned to the now-configured Driving Mode app.

Now, when you enter your car and connect to its Bluetooth system, Driving Mode will engage.

If you're in the Driving Mode app, you'll see that the feature is enabled. But you can also see a new Driving Mode icon in the status bar at the top of the screen.

When calls or text messages come in, you're not interrupted in any way: The phone doesn't ring, there's no text message chime, and the phone won't provide any visual notifications. But if you return to the Start screen, you will see one indication that something has happened: The tiles for the Phone and Message apps will display their notifications normally.

Those who attempt to call or text you will receive the automatic text message reply.

I wrote about another Update 3 feature called App Shutdown yesterday, and I'll be looking at more new Windows Phone 8 Update 3 features in the days ahead.