Some really good ideas here too, thanks. I guess it is personal preference, and does come with experience. A fair few of the guys have never really done any sort of tabletop RP or even RP in gaming format. So as it is many peoples first true d&d experience I guess its way more prone to the constant OOC talk. But I will definitely show these tips to the DM.
My group often spends the first hour after their arrival getting all the OC talk out of their system. They discuss politics, and the latest Star Wars movie, they discuss what happened in the last session, and they crack jokes, while unpacking all their stuff (snacks, drinks, dice, sheets, books).
During play there are often moments when the players exchange OC talk. These are either on topic (they discuss strategy, or talk about other information that they got earlier), off topic (they make references that have nothing to do with the game), or they are jokes. All of these are fine with me. To me, playing D&D is kind of like enjoying a movie at home. The players are supposed to react, not just as their characters, but also as themselves. I enjoy it when my stories provoke a reaction. I love it when there's a plot reveal, and the players put the pieces together during OC banter. That's great! I also love it when they really dislike a character who is intended to be disliked, and they make jokes about him. I want the story to provoke reactions from the players, just like a movie wants to provoke reactions from its audience too.
There's plenty of DM's that worry that all this OC gets in the way of role playing, immersion or storytelling. But I disagree with that strongly. Because during any session there are moments of strong and weak attention. The players don't have to be immersed fully every second, they just have to be immersed during the scenes when it matters. For example, when there's a sad scene, or a very scary/tense scene I want them to be in character, and feel the mood. As a storyteller, I am fully in control with that. I can control the mood with the way I convey the story, and as a DM I can enhance that mood even further with sound effects and music. So when I want them to be scared, they WILL be scared, because I know how to tell a scary story. And when it gets scary, no one is cracking jokes.
I'm also not worried about the players exchanging information with OC banter, because I know that I can rely on my players to play it out in a way that makes sense. For example, player 1 has some information, but player 2 has some information too. When they put those two bits of info together, there's a big conclusion. The players may have already reached that conclusion during their OC chatting, but I leave it up to them to play out how their characters come to share that info with each other.
It's also kind of great when one player has to make a tricky decision, and all the other players (whose characters aren't even there) are giving him advice, and discussing what to do. Because this means everyone is engaged by the story, regardless if they are there or not. This is why OC talking is something I encourage, and I don't understand why some DM's are so fanatically against it.