It can be made commercially in a few different ways, either by running rolls of paper through a bath of either sulfuric acid or zinc chloride, or by coating the paper with silicone.
Why you’d want to use it is if you are making a particularly oozy, sticky baked item (such as carrot cake) that might otherwise stick to waxed paper. If you notice recipes having you line a pan with waxed paper, and then grease or butter the waxed paper, that’s their way of compensating for not using parchment paper.
Parchment paper doesn’t smoke. If you line a cookie sheet with waxed paper and then make cookies on it, you’ll notice that the waxed paper will smoke in the oven. Parchment paper won’t.
Because it doesn’t smoke, you can use it to cook bundles of food in. Let’s say you want to steam a fish with some slices of lemon or onion with it. You bundle it all up in parchment paper, seal the bundle with folds, and then bake — the parchment paper wrapping will essentially steam the fish.
Parchment Paper is common in the UK. Parchment Paper didn’t use to be widely available in North America. Even though you can get it now at most grocery stores, people continue to use waxed paper because it’s what they are familiar with, and it’s about half the price of Parchment Paper. You can get Parchment Paper in North America quite cheaply at restaurant supply stores, but it comes in very large quantities posing the problem of how to store it all.
Cooking Tips
Not good for putting on top of things for the purpose of preventing it from forming a skin (e.g. puddings or sauces in the fridge). The item you are covering won’t stick to the Parchment Paper, and so will form a skin right under it.
Parchment paper will become brittle at high temperatures, but still can usually be re-used several times.
Substitutes
Waxed paper
History Notes
Before the advent of Parchment Paper in the early 20th century, recipe books advised the use of regular, white writing paper as a baking paper.
Sources
Wilson, Bee. The Kitchen Thinker: Baking-parchment. London: Daily Telegraph. 13 July 2010.