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KDE Going all-in on a Wayland future
(blogs.kde.org)
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The description in the ticket isn't too bad:
It really just hides the window contents. In effect, it is similar to minimizing a window, except that it doesn't spring into your panel and rather stays in place as just the window title bar without the contents.
It is a niche feature, if you couldn't tell. But it isn't some KDE specialty feature; various other desktops and window managers also support it. I think, it was more popular in the early days of graphical user interfaces, when we were still working out, how we want to do panels and such.
And conversely, I do think it makes more sense as a feature on big screens like you can have today, where your panel might be quite a bit away.
Don't think, window shading will make a big comeback just yet, but yeah, probably enough existing users that use it, so that it would be cool to support that workflow.