Essentially, Squirrels use their tails to steer in the air by using the fluff as air resistance. by flattening their bodies and using their tails as a rudder, they can reduce their terminal velocity so much they can fall from any height unharmed.
Mark Rober has a 3 part series all about squirrels and how they jump where he builds an obstacle course for them. He has a pretty good explanation of how squirrel’s tails factor into their jumping begging at 16:10 in this video: https://youtu.be/hFZFjoX2cGg.
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