A shelf holds two stacks of items which will not deteriorate due to exposure, the default setting is to contain weapons only. Shelves can be reinstalled as needed and do not block passage.
The shelf does not have beauty regardless of its quality and items stored on it negate the ugliness mood effect of raw materials left on the ground. The shelf removes filth penalty on its occupying tiles but does not negate the beauty malus of natural floors.
For example: Allows neat storage of Medicine (-4 negative decor) within a hospital.
The two main purposes of this furniture are to preserve weapons and mortar shells close to defense structures, as well as to improve crafting speed by reducing the hauling distance between raw materials and stocking of finished products, once shelves are placed by the side of production benches.
For example, crafting medicine requires three raw materials: cloth, herbal medicine and neutroamine, which anyone might have stored respectively in the tailor's stock and hospital pharmacy. The distance between those stocks, the drug lab and back to the medicine stock will waste large amounts of time (hauling) that could have been used to craft more products instead, and that's when shelves become invaluable. Everything in one place is better than everything scattered all around your base.
In Alpha 16, it was known as the Equipment rack and could only store apparel, mortar shells, or weapons.