The term comes from MMORPGs that include a profession that destroys one thing for another. In world of warcraft, enchanting needed an ethereal type of material to craft enchantments on armor and weapons. It was obtained by "disenchanting" other pieces of special armor. The better the armor, the better the material. Because the material came out as dust and crystal shards, people called the act "sharding."
Because "sharding" a piece of armor would destroy it and replace it with expensive crafting materials, it was always a given that if your account was hacked by a chinese Farmer, he would shard all of your epic gear and sell the shards for gold.
It was also common for other players to do the same against one ex boy/girlfriend. See Example 1.
It became so ubiquitous, that it was used in games ever since. See Example 2.
It is also used by gamers in real life. See example 3.
2. Gragas' explosive barrel can shard a whole team.
3. Did you see that skater fall a second ago? I pretty sure he just sharded his teeth.