Gear 1(Normal): We assume it's his normal state.
Gear 2(Speed): Luffy squeezes his legs to forcibly pump more blood flow, therefore increasing his speed and flexibility for a momentary period. Luffy doesn't necessarily increase his power but it looks as if he's stronger because of the fact that Speed = Weight.
Gear 3(Strength/Power): Bite his thumb to create opening in his bone where he blows air hard as he can where it increases his size of a limb like a balloon. This slows down his speed but increases his physical strength.
Gear 4(Durability/Defense): As Luffy is rubber and already able to withstand physical attacks but against swords or cutting power, he'll still get cut. Luffy can also lessen the damage from Haki attacks with this. Also, G2+G3+Haki won't be enough when fighting against top notch guys in the future. I believe he'll need Gear 4 as well.
Basically, Luffy will need to go Gear 2 and pump out even more blood to get started, normally Gear 2 should increase his speed but he's only pumping more blood for momentary time period, where he increases his blood flow and speeds up his molecules. His heart will beat faster than ever and he'll then quickly revert back to normal and he'll cools down immediately. This will make ordinary rubber harden and become much more durable, not only it makes him defensive, his overall punches and kicks are stronger because the rubber is hardened(similar to vulcanization). The drawback is that his speed will remain normal and his stretching capability has reduced, close to Luffy Oz level.
The method to break out of Gear 4 and revert to normal is sucking his thumb which will slowly warm his thumb, then he'll bite his thumb and turn Gear 3. It will crack the harden body of his and return to his normal state. The weakness of this technique is rapid heating which will turn him back to Gear 2.
In the end, he'll have wide array of techniques to use against the right opponent he faces.
