What dashboard sharing as the name of it explains is based on a dashboard. You can only share a dashboard with this method, not a report. Consider that you have a dashboard like below screenshot, and you want to share it. There is a share link at the top right corner of the dashboard.
Dashboard sharing have very few options to set and is very simple to configure. You just need to add the email address of people whom you want to share this report. You can also write a message for them to know that this report is shared with them.
Click through for more information. Note that this is a paid feature.