What you call someone when your not sure if they are male or female and you do not wish to offend them in any way. You may only call someone this if they are a women and look a tad mannish, a gay man, or you think that they are a transsexual. It is normally used if you want to know if the man-women has a penis or not. Normally they do. They can also be called Ha-she's, transsexual, that gay kid, trannys, or Sha-has (if you wish to sound gay)
Man 1: Is that a Sh-he?
Man 2: No she has a vagina, not a penis