In the days before electronic control, transmissions had mechanical components that helped tell the transmission when to shift gears. Sometimes these controls would fail and cause shifting problems. One of the main ones that comes to mind is the modulator. This is a device placed somewhere on the outside of the transmission and connected by a hose to engine intake vacuum. The engine’s intake vacuum is directly tied to engine load. The modulator takes this vacuum signal and helps tell the transmission when to shift based on engine load. If it fails, it can leak internally and cause the engine to draw in a bunch of transmission fluid. When this happens, you'll notice a lot of white smoke out the tail pipe and low transmission fluid.
Transmission fluid also does a good job of cleaning out your engine, by the way. If you remove the vacuum line and you see transmission fluid in it, replace the modulator. Some modulators are adjustable. I won't get into the adjustment here but consult your service manual for specifics on that.