What is sHTML?

i read somewhere that i need to change from htm or html to shtml to use the include function on my files, why is it?

SSI-enabled HTML

shtml will make your file parseable for cgi servers and they are those that will read the "include" function. But maybe your server does not support that, the best whay is to create a server side site that includes the files.

As XavierX said, SHTML is a SSI-enabled HTML.

What is SSI?
It is a very simple server side language mostly used to include the contents of one or more files into a web page on a web server. Besides that, SSI also allows simple control directives such as if and else.

Almost all Apache Web Server installations are SSI ready.

My recommendation:
If you are interested in starting with server-side scripting, I would strongly recommend going one step further and use PHP. It is a lot more complete, powerful, and it is easy to learn.

Here you have a good set of PHP tutorials:
http://www.scriptingok.com/tutorials-category/PHP-MySQL