The parachute has always been a game mechanic unique to the Battlefield series. Its role and function is the same in Battlefield Vietnam and Battlefield 2: removing any fall damage, provided it is activated far enough from the ground. Although it serves the same purpose in Bad Company 2, it has some new properties compared to its previous inclusions.
Although the button with which to activate the parachute varies between the different game platforms, the principle is the same: hitting the button releases the parachute. Only hitting the button once will suffice, but if you feel like bashing it just to stay safe, there is no reason not to. As far as I know, there is no way to deactivate the parachute once released other than actually landing.
When to use the parachute is not as simple as it may sound. You should not simply bash the parachute button immediately after you jump out of the chopper, jump off a ledge or whatnot.
There is a way to reduce the time you spend hanging as a juicy mid-air target: namely hitting the parachute button only a few meters above ground. The parachute activates the instant you hit the button, and it also instantly reduces your falling speed to "parachute-gliding-speed", without delay. Hence you can, theoretically, release it a fraction of an inch above the ground; however, we must take in account for latency, and consequently the safest distance is a couple of meters above the ground.
Killing someone while gliding in a parachute awards you an additional +30 points in addition the normal +50 kill score.
Too often I see people activating the parachute at this height, which is never a good idea, as described above.
This is a far better height at which to activate the parachute.
Get out of the chopper!
The primary use of the parachute in-game is similar to real-life: saving your life should you jump out of an aircraft. But even here you find variations; there is a big difference between bailing out of an exploding attack helicopter to survive the blast and jumping out of a transport helicopter to assault on foot. How the parachute is implemented is entirely based on the situation the player is in.
For instance, if you are flying an AH-64 Apache or Mi-28 Havok (the two attack helicopters) above the enemy deployment base in a conquest game then you are most likely to die very fast without accomplishing much; parachuting into the enemies spawn doesn't guarantee survival. Hence you may as well go down with the ship in order to reduce the time it takes before you are able to return to the fight.
Due to the amount of attention the helicopter already has, it might be as good for the pilot(s) to stay and go down with it, especially if it had been a Conquest game since you would most probably not have been able to accomplish much even if you had landed safely. On Rush however many of your teammates would be nearby, so then you could head for the M-COM if you made it to the ground in one piece.
If however you find yourself in a AH-60 Black Hawk or Mi-24 Hind (yes, they both count as transport helicopters even though the Hind has less seats and a better armament), jumping out and using the parachute is almost always the best option. You shouldn't, however, stay inside the chopper for long, as the transport helicopters are really for transporting troops to the front or drop behind enemy lines; you usually find these in the hands of the attackers on Rush maps, with the exception of Port Valdez and Isla Innocentes where the defenders eventually get a hold of a transport helicopter. Take note, that only one squad member needs to parachute out behind enemy lines for the rest of the squad to spawn on him.
Even though you are dropped from an airplane here, the basic principle is the same: infantry being transported to the frontline for then to jump out and continue on foot.
Jumping off ledges
Though the intended purpose of the parachute may be to survive extreme heights, the parachute has found its use in other areas as well. Another area it shines in is jumping off of ledges unharmed. Even if you may not die from the fall, you can take a lot of damage and could hamper an upcoming encounter with the enemy. Many use the parachute to avoid this, and you'd be surprised of how low heights at which the parachute can be used.
Jumping off this roof without the parachute would cause some serious fall damage.
However useful the parachute may be to avoid taking fall damage, it does have a side effect which may work against you. After landing, the parachute is still visible above you for a couple of seconds. This tells the enemy exactly where you are even though you may not be spotted, even over cover and low buildings.
The parachute has provided the soldier in the picture with a safe jump from the building to the right, but he is very easily seen by the enemy.
You should always keep in mind both of the effects of using the parachute, and weigh the pros against the cons in every situation. Perhaps taking a little fall damage will be worth avoiding detection. On the other hand, if the ledge is far above the ground, then surviving the jump with good health may often be worth it even if the enemy may learn of your position. Often you jump off roofs and ledges to escape the enemy, so they already know where you are.
However many uses the parachute has, whether or not to use it will always depend on the circumstances. Keep in mind the arguments pointed out above at all times when you consider using the parachute, and remember to deploy it at low altitudes rather than far above the ground. Learn when and how to use the parachute effectively, and you will have added another powerful aspect to your playstyle, further increasing your versatility and performance as a soldier on the Battlefield.