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Shaod is a term describing the process of being converted into an Elantrian.
In Elantris, it is considered a curse to be struck with the Shaod, as at the time of the book, the transformation is unable to complete itself, and the person is left a shell of their prior self. Those stricken with the Shaod were exiled to Elantris, where they would slowly accumulate a large number of injuries (due to their being stuck in the middle of their transformation, their bodies wouldn't heal).
When Raoden added the chasm line to the Aon Rao formed by Elantris and the surrounding series, the Dor was suddenly able to complete the transformation of those stricken by the Shaod. These became full Elantrians, able to access the Dor through the use of Aons.
One of the many oddities of the Shaod is that it only takes people from Arelon or Teod. It is suspected, but not confirmed, that this is due to AonDor's close connection with Arelon in general.
It is possible to mimic the physical effects of the Shaod (Hrathen does so), but the only known way to become an Elantrian is to be one of those taken by the Shaod.