Taken from OpenStack User Guide:

Shelving is useful if you have an instance that you are not using, but would like retain in your list of servers. For example, you can stop an instance at the end of a work week, and resume work again at the start of the next week. All associated data and resources are kept; however, anything still in memory is not retained. If a shelved instance is no longer needed, it can also be entirely removed.

The hypervisor (say libvirt for example) will still be aware of a VM in shutdown state. You can see this for yourself by doing a shutdown on an instance and then doing "virsh list --all" on the nova-compute (libvirt) node. You will see that there is a virsh domain defined for the shutdown instance. For a shelved instance, the instance is completely disconnected from the hypervisor so libvirt is no longer aware of the instance. Also there is no "contract" that the VM will restart when unshelved on the same hypervisor. (That's a good thing and one of the purposes of shelving.)