This is a response I posted to the same question on another aviation forum on the net.
1. Helicopters are extremely helpful at fighting fires, even small ("Type 3") helicopters, such as Hughes 500, AS-350, BH-206B's and L's. The principle role of small helicopters on fires is, at first, "initial attack." That is, when the fire is first reported, the helicopter is launched with as many as 4-5 fire-fighters plus pilot. The pilot lands the fire-fighters somewhere that is mutually acceptable, the bucket is hooked up and the pilot goes to fetch water while the fire-fighters start fighting the fire on the ground. In areas with sparse water supplies, helicopters may be equipped with a belly-mounted tank for the water, which is filled from a tanker truck or a little foldable tank set up near the fire.
A fire needs three things to survive: fuel, heat and oxygen. Helicopters fight fires by taking the heat out of the fire and reducing the temperature of the fuel below the combustible range.
With light fuels such as fast-moving grass fires, a LongRanger (L-3) with a 100-130 gallon bucket can often with one bucket load of water, put out from 50 to 100 feet of fire line in light fuels with a fast trail drop (moving forward at 20-40 kts).
Likewise, a couple of strategically-placed (vertical) hover drops may cool down a burning snag sufficiently to allow a crew to take a chain saw, drop it and buck it up. Take a larger helicopter like a Bell 205/Huey/212/214 ("Type 2") with a 300-350 gallon bucket and the effect is magnified. Still larger "Type 1" helicopters such as SkyCranes, Vertol 107's and 234's (Chinooks) can lift as much as 1500 gallons or more of water at time. That's a lot of VERY heavy rain if you're on the receiving end.
So, on most fires, helicopters don't actually "put the fire out." But, they support the ground fire-fighters to cool things down to manageable level. After the fire is established (such as the current ones down in SoCal), not only do the helicopters do initial attack, but then the helicopters go into a support role, moving fire-fighters here and there, and doing bucket work to cool the fire down and help retard its spread. Also, food, water and supplies are slung in to the fire fighters on a long line (usually 100-150') or, in grasslands, perhaps a short line.
Moreover, some helicopters are equipped with an aerial ignition device that dispenses ping-pong balls containing potassium permanganate and glycol, which about 3-5 minutes after they are mixed and dispensed, burst into flames to start back fires to "fight fire with fire." Some others still sling the old style 55 gallon drum filled with Aluma Gel and mogas, which when mixed together makes a civilian version of napalm. They have a cockpit control for an ignition/drip rate mechanism - same purpose: starting back fires. Or, controlled burns during the "off" season.
2. Most helicopters just drop water. However, increasingly, USFS and CDF contracts require the helicopter to be equipped with tanks for dispensing a chemical additive called "Phoscheck" which is a fire retardant foaming agent that gets mixed with the water. Most medium helicopters such as Hueys, BH-212's, 214's and those types carry a "foamy" tank.
When the bucket is dipped, the pilot punches a button or flips a switch and a little pump injects a user-selectable amount of foam concentrate into the water, usually 3-5 seconds-worth (maybe a quart or so) and as the copter flies to the target, the swirling of the water from the wind flowing over the bucket tends to mix the foam concentrate a bit. As the pilot drops the water, as it gushes out of the bottom of the bucket, it further mixes the foam concentrate with the water and it becomes sort of like watery shaving cream, thereby sticking to whatever it hits ... the thought being that it's better to have it stick for a while rather than immediately flow off the burning object and into the ground or down the hill (or tree).
Although the Red-dyed fire retardant has been tried in helicopter "tankers" now and again, no one seems to be using it on the Left Coast. The red fire retardant is ammonium nitrate (basically fertilizer) but is a great fire retardant. Because of the need for elaborate mixing apparatus and storage facilities, etc. it is mostly suited for airplane dispersal, where they can fly back to the same location each time to reload. Portable/mobile mixing and dispensing units have been tried over the years but never caught on for helicopters.
3. Of course there are limitations. Pilots who fly on fires (often those who log, also) are very familiar with operating in the HV curve. And with being constantly on the edge of, occasionally in, and quickly out of, settling with power. It can be very interesting if one attempts to drop the load of water with a heavily-laden helicopter while flying uphill and the bucket malfunctions, refusing to drop the water, thereby inviting settling with power. The winds can be strange and often the wind in one location is opposite what it is a few hundred yards away. Flying on fires helps develop one's sense of where the wind is and often knowing this well, and the effects of terrain on wind makes the difference between "riding the updraft" up the side of a mountain, or having to circle to climb up.
One can't fly too low when dropping water, unless it is a fairly speedy trail drop otherwise the rotor wash will fan the fire, cover the ground troops with hot, sooty debris and not endear the pilot with anyone on the ground, especially the Incident Commander (the "boss" of the fire). Since we mostly fly with the door(s) off when doing bucket work, it is necessary for a fire pilot to have pretty good vertical reference flying skills when dipping, dropping and doing external load work. The typical Type 2 helicopter (Huey sized) has the bucket on a 100+ foot long line.
Naturally, it demands a pretty good amount of attention to monitor as may as three or four frequencies simultaneously, keep an eye on the gauges, look out for other traffic on the fire and always be looking for an "out" in case of an emergency. It's demanding, occasionally exciting, rewarding flying, plus there's a lot of comraderie among those who fly in the fire services.
I hope this helps you understand a bit more how we fight fires from helicopters. Tailwinds.