The Shear Modifier changes the distance of the mesh vertices perpendicular to a chosen axis (default: local z-axis) along another axis.
The orientation of the shear axis and direction of the shear can be changed by changing the values in the Axis boxes. Choose a value of 1.0 to select a particular axis (setting the others to 0.0). Intermediate value result in an intermediate axis.
A better way to set the reference axis is using the Widget.
The Magnitude dialog allows you to define the squeeze amount as an Analytic Function of position along the reference axis. You can also use a Point graph where you can generate an arbitrary function by manually placing points and setting the spline interpolation. To do this, select Point from the Function drop-down list under the graph. The example graph on the right shows the way it was done for the example mesh displayed below.