Traffic shaping prioritizes certain network applications by delaying the flow of lower priority network packets. Sometimes when somebody is watching a streaming video or trying to download a large file, it can interfere with an important business application such as voice over IP (VoIP). Traffic shaping allows administrators to prioritize VoIP over other less important data-heavy applications by limiting the amount of bandwidth that can be consumed by those applications.
Traffic shaping uses fingerprinting tools to identify the application associated with a data packet. Perhaps you can allow peer-to-peer file sharing and media streaming to use only half the bandwidth of your network. That way, VoIP calls, which are prone to latency, will always get through.
Once VoIP calls are no longer being made, other applications will take top priority again. This is what makes traffic shaping dynamic and efficient. Unfortunately, some applications use encryption to circumvent application-based traffic shaping. In that case, you can use what is called "route-based" traffic shaping which applies regulation policies based on the source and destination.
Traffic shaping is one of the most important ways businesses can ensure high quality of service on their networks. It can be a very useful part of a network firewall.