This is the official description of the docs
If this option is enabled, the base revision of files will be saved to a shelf that will be used during a 3-way merge if applying a shelf leads to conflicts. If it is disabled, IntelliJ IDEA will look for the base revision in the project history, which may take a while; moreover, the revision that the conflicting shelf was based on may be missing (for example, if the history was changed as a result of the rebase operation).
What does this setting do in more simple terms and does it have implications on merge conflicts as well without using shelves explicitly?
The reason for this question is mainly an issue we are frequently facing during merge conflicts, where old changes keep re-appearing out of nowhere that delete lines of code which are still being used.
One of the patch files in the .idea/shelf directory contains these exact changes which makes me assume it is related to what we are witnessing.
Uncommitted_changes_before_Checkout_at_28_12_2021_10_30_[Default_Changelist]