Shrinks the region of the currently selected components inwards in all directions from the currently selected component on the polygonal mesh. The characteristics of the reduced selection region/boundary is dependent on the components in the original selection.
For example, if you have a polygon mesh comprised of four-sided polygons (quads) with nine interior vertices selected, in the shape of a square grid, and then choose Select > Shrink Selection Region, the eight vertices that form the boundary on the selection become unselected on the mesh, leaving a single vertex selected. If you continue to shrink the selection, eventually nothing is selected.
Many of the polygon selection features are available from the context sensitive polygon marking menu when you press 
+ 
whenever a polygon component is selected.