This action saves a shape outline as a path and deletes the source shape layer*.
To use this function, create or select a shape layer and double-click the "Path from Shape" thumbnail.
By default, the created path is named "Path 1". However, if a file with that name already exists, you will be asked to enter a different name (more about path names).
Why convert a shape to a path? For example, to raster-stroke it (see example). Or to incorporate a vector drawing into a JPEG file (unlike shape layers, paths can be stored with various image formats).
*To create a shape-based path without deleting the source layer, select this layer in the Layers palette and double-click the Save Path action.