SHR vs Classic RAID (this is as simple an explanation as it get...).
With Classic RAID, in the image towards the left, the storage volume is created based upon the smallest disk within the Array. As the Classic RAID Array was created with a 500GB drive, then all drives within that array can only use 500GB of space per hard drive, effectively creating a 5x500GB RAID Volume.
With the SHR, as reflected in the right image, the SHR will create divide each disk into smaller chunks, creating additional redundant storage, and allowing the capacity of each disks to be utilized to its maximum capacity.
Also with the SHR, if the storage system is being upgraded with larger disks - the newer storage will be available for use as soon as two disks have been upgraded, as there is enough drives to create a redundant storage array. With Classic RAID - the entire storage volume will have to be upgraded to all new drives before the new storage can be used.
In your case:
1) with RAID 1, you will have 500GB of usable space.
2) with SHR, you will have 3.5TB of usable space.