A shape key is a saved deformation which has been applied to a group of vertices. Typically, they are used to create soft-body deformations, such as facial expressions. The process to define a shape key is as follows:

In Object mode, make two shape keys in Object Data Properties/Shape Keys
The first shape key will be called Basis, as this will be the 'normal' un-deformed state of the object
In Edit Mode select the second shape key, which will be called Key 1
Deform the object via its vertices, polygons or edges (just don't add or remove polygons)
Move back to Object Mode, where you will notice that the deformations will disappear
Moving the value slider to 1, will bring the deformations back
The deformation can now easily be animated

Figure 3. A Shape Key in action

Collection 1 shows two examples of shape keys.

Collection 1. Animation techniques
mograp_shapekey_to_sphere		Shape Keys (in Object Data Properties) is a class of animation control known more commonly as morph targeting. In brief, it is a way of storing the position of vertices, and animating between these positions. To turn the cube into a sphere, the Deform Selection/To Sphere was used.
mograp_shapekeys		More Shape Key madness. To turn the flat square into a circle, the Loop Tools add-on was used (Loop Tools/Circle).