Shift-reduce parsing attempts to construct a parse tree for an input string beginning at the leaves and working up towards the root. In other words, it is a process of “reducing” (opposite of deriving a symbol using a production rule) a string w to the start symbol of a grammar. At every (reduction) step, a particular substring matching the RHS of a production rule is replaced by the symbol on the LHS of the production.
A general form of shift-reduce parsing is LR (scanning from Left to right and using Right-most derivation in reverse) parsing, which is used in a number of automatic parser generators like Yacc, Bison, etc.