Shell sort is an efficient sorting algorithm developed by Donald Shell in 1959, improving on insertion sort by dividing the input into smaller subarrays that are sorted using predefined gap sequences. The algorithm's time complexity varies, being O(n^2) in the worst case and as efficient as O(n log^2 n) in the best case, with advantages including in-place sorting and effectiveness on small to medium-sized lists, while its limitations include the effect of gap sequence choice on performance and lack of stability. Overall, Shell sort is a viable option for specific sorting needs despite its drawbacks.