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What does Shed mean?

The opening formed by raising and lowering the warp yarns on a loom during the weaving process. The shed opening is what the weft yarns are passed through to complete the weaving interlace.

Heddels explains Shed

The shed is the (temporary) area of space between the upper and lower warp yarns on a loom that the shuttle passes through.

A shedding device separates the warp yarns and alternatively raises and lowers them in order to simplify the weaving process for the weaver so that he/she doesn’t have to individually thread the shuttle through alternating threads.

Additional Resources

Side-view of the shed opening:

Raw Denim Term - Shed

Source:  weavezine.com