Had a Player recently ask if the talent Parry is used to reduce the damage from a melee weapon, does the melee weapon become Sundered? Also to that end what happens when Parry is used vs a brawl attack, is the opponent’s hand sliced off?

Are there rules on this that I’ve missed?

You don't generate advantages when parrying, so you cannot activate sunder.

Well, lightsabers don't instantly cut through everything they touch. Witness several examples in the duels on Cloud City and Death Star II. So you could say that a glancing blow from a parry on a melee weapon did damage the normal blade, just not enough for it to have the damaged effects applied. For someone using Brawl that's a bit trickier, but if they're wearing armor, the same logic applies. If not. . . well, if they're unarmed and unarmored and facing someone with the glowy plasma sword of death +5, then they should be very wary with their strikes, ready to pull back the moment a lightsaber blade even twitches their direction.

Parry doesn't necessarily mean hitting something with your lightsaber. It can also mean shifting out of the way, feinting to throw off an attack, using an off hand, etc.

Luke technically Parries Kylo several times in the end of THE LAST JEDI and they never touch.

Also, a successful lightsaber attack doesn't cut or damage anything unless the attacker spend advantage for it to do so.

Parry might as well mean that the attacker only strikes a glancing blow, as a full on follow through would have meant being impaled or bisected by the lightsaber. It does not necessarily mean that the saber warded off the attacking weapon directly, especially with Brawl attacks.

I think as well the saber's intended to behave differently in this new canon than it did to the older canon, especially legends and the prequels. So parrying is more akin to the mechanics of combat in KOTOR where it was cortosis-weave sword vs saber. That is, the weapon is undamaged by contact with the saber.

A potential house rule would be to allow a character to spend an opponents remaining Threat on Sunder after they have activated Parry with their Lightsaber. ie the attacker rolls Success with 4 Advantage, the defender spends 3 to Parry then the final threat is spent to activate Sunder and damage the attackers weapon by one step.

Its a complete house rule, and goes both ways for the pc’s, so I would definitely have a good discussion about it with the players before implementing it.

Don't fall into the trap of confusing game mechanics with real life (or what passes as real in a RPG context). Mechanically nothing happens to the defensive weapon etc. and it's up to you/the GM to narrate it so that it makes sense to you.

However, the GM can, and probably should, use a Triumph result on the attack to do something that fits the situation.

Improved parry is what you want.

Star Wars is a space opera, not hard sci-fi or gritty realistic action. Don’t overthink the simulation part of the mechanics. Rule of cool. If sound in space feels right, we can have sound in space. If fights against lightsaber users should make sense even though the opponents don’t have lightsabers or cortosis gizmos, those opponents get to defend themselves.