SHSH Blob is a signature file which is verified against Apple Server to verify the the iPhone is running the latest version of iOS. If for some reason, when you are try to restore to a previous version, Apple will not allow you to restore it because, you are trying load a older version of iOS. To make this possible, we need to send a request to a different server (Local or designated) which sends a SHSH blob (which was saved by you) back to iTunes faking that its the current version. (credit: machackpc)