At first I thought "desktop shell" was supposed to be compositor, but that's not the case, a wayland compositor like sway is a requirement. I've been using sway for years I have no idea what a "shell" is? It's somewhere in between a desktop environment and a theme?
Yes. It occupies the spot in the Sway tutorials that recommend you "waybar, fuzzel, tofi, [etc]" to fill out the necessities. Noctalia, DMS, and other Quickshell projects cover that void.