What does cabal install --shadow-installed-packages do?

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cabal install --help says this about --shadow-installed-packages:

If multiple package instances of the same version are installed, treat all but one as shadowed.

But I used this option in a sandbox and it seems that all installed packages were shadowed, and everything was rebuilt in the sandbox. This was actually what I expected based on the name of the option, but it doesn’t seem to match the help description.

What is this option really supposed to do?

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