To load the failsafe firmware on ArduPilot's Attiny chip, you need to do the following.
1) You'll need an ICSP AVR programmer. We recommend AVRSIP2. Connect the cable to the correct ICSP port on your board, as shown above. The red stripe on the cable should be on the same side of the connector as the square solder pad on the back of the board. (On our boards that means that the red strip is on the side closest to the processor)
2) Now you'll need to change (turn off) one of the default "fuse" settings in the Attiny45, which divides the internal clock by 8 so it only runs at 1 Mhz. (Explanation of all that and more about fuses are in the excellent Sparkfun tutorial here). Run the AVR Studio program that came with the AVRSIP2 programmer. Ensure that the board is powered on by connecting it to an ESC or other power source! The red LED on the board should be on.
3) To change the fuse with AVR Studio, connect the programmer and go to Tools/Program AVR/Connect. Choose AVRISP mkII. You may get an error (choose cancel). On the "Main" tab of the dialog, click the "Settings" button and pick 125khz and click "Write". Then make sure "Device" is Attiny45 and "Read signature". At the bottom it should say that all's okay. If so, switch to "Fuses" tab and uncheck CKDIV8. Press "Progam", then "Verify" to make sure it's woking. [Note for those who are curious: the AVR programmer can only work at 1/4 of the clock speed of the chip. The Attiny ships with a 8Mhz internal clock, but when that DIV8 fuse is set it's only running at 1Mhz, so the programmer must be running at less than 250khz. Once you clear that fuse and the chip is running at full speed, the programmer can run at 2Mhz, which is 1/4 of 8Mhz]. Your processor is working fine and ready to program.
4) Now you'll need to burn the firmware. Still in the AVR Studio dialog box you used above, go to the Program tab. Where it says "Flash", input our firmware hex file. If you've already downloaded it in some folder, you can select that here. If not, switch to your browser and download this file. Click "Program". All should go well and you'll see the OKs below. If you want to make sure it's working, you can click "Verify". Now you can go back to the "Main" tab and change the Settings to 2Mhz.
That's it! The failsafe should be working now. Connect the CTRL lead to channel 5 or 6 of your RC receiver and power on the ArduPilot board. When you toggle that channel a red LED should go on and off on the ArduPilot board, indicating that control of the output channels is being switched from the RC receiver to the autopilot or vice versa. For extra fun, toggle it back and forth fast five times. That should reset the autopilot (for in-air recovery).