The ammo will sit quietly in a corner of the map until the script is called. (It will not be hanging in mid air ... unless you want it to of course.
Then it will be teleported to just underneath the parachute. As the chute falls the position of the ammo is adjusted to keep it just under the chute. The -0.5 means half a metre under the chute, which may not be the right distance - you'll have to experiment.
The script also checks to see if the para has been damaged and repairs it if it has. The script ends when the para is less than 2m from the ground, though I'm not convinced by the syntax of that line ... but then I'm not a script expert.
The secret - as with all these things - is to try it and see what happens. If it doesn't work play with a bit. If that doesn't work come back here and tell us precisely what's going wrong. The command reference guides and scripting tutorials available in the Ed Depot will help you understand what the commands mean which will help you understand the script.
To get you started ...
_para is a local variable which applies only to this script ... means you can use the script lots of times with different vehicles/paras without changing it.
~0.0001 is a small time delay
? .... : .... is the if-then command.
As I said, I don't know much about chutes but I suspect it starts to fall the moment its created, so you may have to use the createVehicle command to create it just below/behind the Hercules at the right moment.