Explain how a parachute works

A parachute increases air friction, thus reducing falling speed.

Indeed, the air friction is roughly proportional to the surface of the object falling down; the parachute tremendously increases that surface.

As the skydiver and the parachute fall, the air around them fills the inside of the parachute and causes them both to fall at a much slower rate than normal. The large surface area, and the light weight of the parachute allow it to fall slowly.