Parallax is an effect that can be experienced when using the 4x or 12x scopes. Red dot sights and holographic sights do not seem to ever have any degree of parallax.
The parallax in Onward simulates a real-world effect that happens when using scopes, though it is currently exaggerated. Simply put, parallax moves the reticle off of where your point of aim actually is. To be more specific, the reticle moves off of your target based on the position of your eye in relation to the scope. For example, if your eye is in perfect alignment with the scope, then the reticle should accurately portray where you are aiming. If your eye moves to the right, you will see the reticle also move to the right—even if the rifle and scope remain perfectly still—which will cause your shot hit to the left of the reticle.
To witness the effects of parallax, go to the shooting range with a 4x or 12x scope, aim your rifle downrange at a target, and—while somehow keeping the controllers very still, perhaps by completely setting them down—move your eye around while looking through the scope. No matter how still the controllers are, the reticle will move. If you shoot at the furthest targets while using a 4x or 12x scope, you can quite easily completely miss these targets due to parallax, even with the reticle placed perfectly at the center mass of the target.