The dead parachutist becomes a metaphor for the boys' increasingly distant relationship with the real or adult world they have left behind. By assuming this figure must be a beast, with the implication that it has frightening or supernatural powers, they are revealing their break with the rational world of civilization.
All of the boys but Simon treat the dead parachutist with an irrational level of fear, including Ralph. The emotional response that takes over for all of them reflects the way they are being gradually consumed by their more savage, "primitive" instincts. The designation of the being as a beast, without any thought that there might be a more logical explanation, is an outward symbol of their own descent into chaos.
This becomes most apparent when Simon discovers the truth that the beast is nothing more than a dead parachutist. The other boys have been doing frenzied dances while he was gone, unleashing their ids. As Simon comes running down the mountain with his news, he trips and plunges to the beach. The other boys, including Ralph and Piggy, descend on Simon, thinking he is the beast. They kill him, and as a violent storm hits, his body is swept away into the sea.
The boys' irrational response to what they think is a beast shows how quickly the veil of civilization can be ripped away, leading people to unleash their primal fears, desires, and aggressions in destructive forms. Simon is a Christ figure, bringing truth to them, but they are no longer able to hear this.