Short anwer . YES . everytime you are towing the Tow mode must be on all the time. Even in highway

Long asnwer from a Hummer specialist mechanic
The computer will tell the pump to send extra pressure.
It also Disconnect the clutch in the torque converter to avoid slip and burn it.
Lets said you are towing in highway with D (without the Tow mode) when you get to a hill the clutch in the converter will start slipping due the heavy load . Once tow mode is on clutch will not engage and only fluid is passing the Engine Rpm to the tranny
RPM will be higher . . Also the alternator will produce more power .

He also told me to get the aftermarket cooler (already have it) towing mode produce more pressure so There will be more heat

 

How is braking improved?

 

The guy explained about how the tranny works in tow mode
I included the braking cause . I though I read about it in the manual . Just recheck but couldn't find it. Must has been another vehicle

 

Holding it in a lower gear longer will improve engine braking. I bet that is what he meant.