Shredded coconut is exactly what it sounds like. Nothing hidden, nothing tricky. It is made from the meat of the coconut from just under its fibrous brown shell. Unless you live somewhere tropical or grate it yourself, the coconut has likely been dried before packaging.
You can find shredded coconut both sweetened and unsweetened. As is probably intuitive, the sweetened version is best used in baked goods. It's higher moisture content and sweetness give things like muffins and macaroons a more even (i.e., less dry) texture and flavor. Use unsweetened coconut for savory dishes: curries, chutneys, and meat dishes.
Look for good-quality shredded coconut at specialty markets. There are also some good sources online:
Here are a few of the coconut recipes on my list:
How do you use coconut in your cooking?
Related: How to Make Coconut Butter
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(Image: Emma Christensen)