This is very subtle. When you are drawing or resizing an object with the Snap to Grid on (and without pressing the Shift key), both the horizontal and vertical edges of the object snap to an invisible grid.
When you are drawing or resizing with the Shift key down:
The avi movie below shows an example of resizing an object while the Shift key is pressed. Notice that when the Shift key is pressed you can only change the height, width or proportions of the object. Another way to say it is, when the Shift key is pressed you can't change the height, width and proportions at the same time.
Copyright 1996 by the Curators of the University of Missouri