The setting for Shared Location (Work Center, Locations tab, column Shared Location) for inbound locations, controls weather the parts on this location can be reserved for material that does not have a operation connection to the work center. I.e. Shop Order 1, with material line A, that is either not operation connected, or connected to a operation on another work center, should that material line be allowed to reserve from this location or not.

Then there is another setting on the work center, Outside Reserve/Backflush, which controls if a material line connected to a operation on this work center, should be allowed to continue the reservation/backflushing logic through this step or not (which is step 3 in reserve/backflush logic for a shop order material line. If you set this to Not Allowed, operation connected materials will not be allowed to reserve or backflush from other locations further down in the logic (step 4 floor stock and step 5  picking locations).

But if you allow reserve and/or backflush, then the shared location on other inbound work center locations will decide if the reservation/backflush  can be done form there or not.   

The About Shop Order Reservations describes the Hierarchy for the Automatic Reserving of Material for a Shop Order and can be a good input for more details!