This page shows how you can implement cascading dropdowns on a SharePoint new
item form. The Web Part on the left side of this page is the same
List Form Web Part (LFWP) you would see on NewForm.aspx for the Sales
Opportunities list.
This page uses the
SPCascadeDropdowns function of the
jQuery Library for SharePoint Web Services.
If you select a Region, you will see that the available
values for State change. Once you pick a State,
the available values for City will change as well. (Not all
States have Cities available.)
While you can see the SPCascadeDropdowns function work here anonymously, you
may not be able to save the item because you are not logged in. (This is
intentional.)
You can download the jQuery for this demo
here.