I am parging a wood foundation and would like to know what materials I require and technique to apply it. I would also like to know how far below grade I should parge.

Is it a pressure treated ply wall? If not,

Yes it is

Usually the practice is to apply a moisture barrier and then plaster wire mesh. One issue is that termites eat tar paper.. You should keep 6" clearance between the finished surface and the ground, even with PT plywood.