Contributing to Open Source projects is always an advantage- it will give you an experience to collaborate with developers around the globe and also to understand and work on a large codebase. This will improve your employability and will always draw the interviewer's attention. As you have chosen the Java Forum for your query- I assume that you are referring to Open Source projects in Java- the best places to look at it -
Apache,
Java.Net. Also Apache has a brief description on how to go about contributing to open source projects.
According to me It basically involves:
>> Using the Application/Project you want to contribute to.
>> Subscribing to the project's mailing list.
>> Going through the Code, trying to build it from the source code, going through the documentation.
>> taking up bug fixes or you can find out some issues with the application and try to take it up to fix it- This would require you to play around with the Application and also understand the code.
if you are a student- You can think of participating in Google Summer of Code. (provided you satisfy their eligibility requirements
)