What is a shape? You can look at the rectangle tool. There are three options above. One of them is a shape: the path is the edge, the interior can be filled with color, and the path can be stroked.

Turning into a shape means turning the edge of the text into a path, just like the shape of a rectangular tool, and the interior can be filled with color (the default color is the color of your original word).

When the grating becomes a pixel, the image will be blurred when enlarged;

The shape is a vector, and no matter how you zoom in or out, the clarity remains the same.

Before conversion, the text is also vector, so there is no difference between rotating and not rotating the shape, but after conversion, you can use the "direct selection tool" to edit the anchor point to deform the text and make a deformed font.