Shandy, in its most general sense, is beer mixed with some sort of sweet beverage. Depending on where you are in the world, that beverage can be fruit juice, sparkling lemonade, ginger ale/beer, or even hard cider.
I can't find any firm information on how shandy came about. I can see several reasons how it could have: to make beer sweeter and more palatable, to lower its alcohol content, to stretch out the beer and make it last longer, or to make it more refreshing (especially when fresh water wasn't always safe to add to the drink).
Regardless, shandy is delicious. You should really try it some time. It's especially good on a hot summer day. Light lagers are usually used, and along with carbonated beverages. The norm for shandy in the United States is ginger ale or ginger beer.
There's a certain unorthodox shandy recipe that's been my go-to for a few years now. I found it on the Tiki Central forums, which I've posted about several times before. This shandy is a bit harder, with a shot of gin and some lime juice. Rattiki, the creator of this brew, likens it to a combination of shandy and the Gimlet cocktail. (Though, we all know that real Gimlets are made with and only with Rose's Lime Cordial... right?)
A beer that Rattiki suggest for this mix is Negra Modelo, a dark and creamy Mexican lager which is not only a fairly untraditional beer choice for a shandy, but is also one of my favorites.
I've adapted Rattiki's original recipe for a single serving, though I recommend Rattiki's method of making a large bucket of the stuff (and also placing naked women behind it). I've taken a bit of poetic license with the garnish as well. Rattiki didn't really issue a name for it, and he never got back to me when I told him I was going to write about it, so I'll go ahead and give it a modest yet fitting name.
5oz Negra Modelo (substitute smooth wheat beer)
5oz ginger ale/beer
.75oz lime juice
1 dash orange bitters
Build over the tallest glass you have, filled with ice. Float Cherry Heering. Garnish with a Maraschino cherry speared through a spent lime shell.