Torque converters are still hydraulic, but they (mostly, now...) have a mechanical/hydraulic clutch in them that can change the torque converter from a three-step hydraulic coupling to a single-step mechanical coupling, just like a clutch for a manual.
"Lockup" refers to when this clutch engages, and you then end up ignoring the action of the torque converter elements. This eliminates torque converter slippage (increasing the efficiency of the coupling, and therefore fuel economy,) reduces wear on the fluid (due to heat,) and reduces wear on the transmission internals (due to heat.)
Typically, the transmission controller is programmed to not "lock up" until it sees a steady-state cruise in third gear or overdrive. Once it does lock up (you can usually tell if you pay attention - it will feel like a "soft shift" and cruise RPM should drop a couple hundred points or so...) "breaking cruise" will cause it to unlock ("breaking cruise" being any change in speed caused by a detected action of the brake or foot throttle - not because you're going up or down a grade.)
An early lockup transmission, as I recall, was the A904/A999 - which was an A727 with a lockup converter and hydraulic control circuit.
Lockup torque converters are now very common on vehicles - mainly due to CAFE (Corporate Average Fuel Economy) requirements - this is one of the very few good things that have come out of CAFE regs (bad ones being the Geo Metro and Ford Escort...) They are found in FWD/RWD/AWD/4WD vehicles, and are just about everywhere since 1985 or so.
So you see, the torque converter is still much like you remember - they've just added another part (the clutch) and made some changes in the valve body (hydraulic control circuit) since you were playing with this stuff last... You probably don't notice it because you haven't had to troubleshoot it - and the circuit itself is fairly simple, most "lockup" failues are due to the control solenoid they put in to engage the hydraulic control circuit...
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