A shell, in a military context, is a projectile whose payload contains an explosive, incendiary, or other chemical filling. Originally it was called a bombshell, but "shell" has come to be unambiguous in a military context. Modern usage sometimes includes large solid kinetic projectiles, which are more properly termed shot. Solid shot may contain a pyrotechnic compound if a tracer or spotting charge is used.
All explosive- and incendiary-filled projectiles, particularly for mortars, were originally called grenades, derived from the French word for pomegranate, so called because of the similarity of shape and that the multi-seeded fruit resembles the powder-filled, fragmentizing bomb. Words cognate with grenade are still used for an artillery or mortar projectile in some European languages.
Shells are usually large-caliber projectiles fired by artillery, armored fighting vehicles (e.g. tanks, assault guns, and mortar carriers), warships, and autocannons. The shape is usually a cylinder topped by an ogive-tipped nose cone for good aerodynamic performance, and possibly with a tapered boat tail; but some specialized types differ widely.
Gunpowder is a low explosive, meaning it will not create a concussive, brisant explosion unless it is contained, as in a modern-day pipe bomb or pressure cooker bomb. Early grenades were hollow cast-iron balls filled with gunpowder, and "shells" were similar devices designed to be shot from artillery in place of solid cannonballs ("shot"). Metonymically, the term "shell", from the casing, came to mean the entire munition.
In a gunpowder-based shell, the casing was intrinsic to generating the explosion, and thus had to be strong and thick. Its fragments could do considerable damage, but each shell broke into only a few large pieces. Further developments led to shells which would fragment into smaller pieces. The advent of high explosives such as TNT removed the need for a pressure-holding casing, so the casing of later shells only needs to contain the munition, and, if desired, to produce shrapnel.