Your knees should not be at less than a 90 degree angle when you sit on the ball--meaning, you shouldn't be eating your knees on it. Most balls have some sort of guide lines on the side of the box, telling you a person so tall should use x, y, or z ball.
We use our birth ball in several ways. Sometimes women will place the ball on the bed, then during a contraction stand on the floor and drape themselves over the ball on the bed.
If a woman wants to be on her hands and knees, she can rest her upper body on the ball, which takes her weight off of her arms. She can rest on the ball between contractions, then many women either rock back and forth during the contractions, or rock back almost off the ball into a partial squat during contractions, you kind of play it by ear and let your body tell you what to do.
The way we use it most, though, is placing it at the foot of the bed, and have mom sit on it, facing the foot of the bed. She holds onto the foot of the bed for support. Make sure her legs are spread fairly wide (while still comfortable); you don't want her knees to the front of her, but to the sides; she should be straddling the ball. Then rock on the ball, with or between contractions. Rocking forward and back, or side to side will help increase the pelvic outlet, and will make some extra room in there for baby. Gravity is putting pressure on baby (and on the cervix), yet mom is still very mobile while not having to spend alot of energy supporting her weight. The repetitive motion of the rocking also helps mom deal with the contractions.
Hope this helps!