This is an excerpt taken from BOL:

Shared memory is the simplest protocol to use and has no configurable settings. Because clients using the shared memory protocol can only connect to a SQL Server instance running on the same computer, it is not useful for most database activity. Use the shared memory protocol for troubleshooting when you suspect the other protocols are configured incorrectly.

Lets you connect to an instance of SQL Server that is running on the same computer. Cannot be used for access from other computers on the network.