The angle of the pinion needs to be parallel with the transmission output shaft. They can be colinear, which is ideal, but probably not really practical in most cases.
So if the angle of the engine transmission is 3 degrees (trans lower than the engine), the pinion needs to be 3 degrees up to make it parallel.
The reason is to minimize vibration. If the transmission and pinion aren't parallel, the driveshaft will tend to vibrate because of the action of the u-joints.
