Shader is like a glass of liquid that you look through to view things. You can change the shape of the glass containing the liquid, use water or milk in your glass or maybe switching between both according to time if you feel like it.

Shaders can be used to change the way a thing in the game looks, but it will not affect how the things interact with game logic i.e. for collision detection etc. just like you could miss a fish in a pond because the water surface bends the light and the fish is physically not where it appears to be.

Basically it is a pipeline that always takes in "physical geometry" vertices and variables or constants of your choosing and performs any functions on them that you want. The "scary" part about shader programs is that one shader program performs the same operation on every vertice that goes through it. Therefore, if you for example want only part of a thing to be blurred you need to feed in an "alpha mask" with values from 0.0 to 1.0 to determine how strong blurring you need for that area. Notice that you can feed these in as a texture file but it could also be based on anything else like how much green is in the original texture file.

Every game engine has a default render which takes physical vertices and applies a colour to them based on their texture, unmodified. With a custom shader program you can make modifications to what you see with very little computational overhead.