We will be using sh commands in our examples. The shell program resides in a file and is passed to the shell. The shell interprets the commands in the file. That is, it reads the commands and decides what to do for each command, possibly doing filename substitutions and redirections, etc. Compare with compiled programs that are translated to machine code by a compiler.
Interpreted languages are slower running but more flexible.
It is easier to develop new programs using interpreted languages because no compilation is required each time a change is made to the script. Numbers are stored as strings and converted as needed. Ability to invoke any Unix command, program or other scripts. Ability to do simple calculations and comparisons. Flow control, or decision-making capability depending on circumstances.