In the Marvel Universe, SHIELD stands for:
1.) Supreme Headquarters International Espionage Law-Enforcement Division
2.) Strategic Hazard Intervention Espionage Logistics Directorate
3.) Strategic Homeland Intervention Enforcement and Logistics Division
That's the kind of thing only teenage boys without girlfriends can keep track of... Anyway, this organization has been around in one form or another since the 1960's when Marvel created it as a way to cash in on the James Bond craze (which spawned a host of other imitators with catchy org titles, like U.N.C.L.E. and C.O.N.T.R.O.L.). It was also a good excuse to bring back classic character Nick Fury, who was now rocking an eye patch. It was very much a Cold War creation, but over the years it became one of the fictional glues that tied the Marvel Universe together, like The Avengers. SHIELD was a watchdog agency that sometimes aided superheros, sometimes hindered them, sometimes employed them, sometimes marked them for "neutralization."
The underpinnings of SHIELD weren't always clear. In more optimistic times, it was a UN organization, sometimes it was a US organization and constrained by jurisdictional restraints. It seemed to have its hands in both law enforcement and espionage. Sometimes it acted like a military organization. Once, it even hunted Godzilla. It was a handy MacGuffin for Marvel writers.
It played an indirect role in the creation of GI Joe: a Real American Hero and Cobra Command. Larry Hama's initial idea was to write about a SHIELD strike force hunting frequent arch-enemy HYDRA. However, at the same time, Marvel was mixed up with Hasbro about the 3 3/4-inch GI Joe toy line re-launch. The editors saw the synergy in Hama's proposal and redirected him to the GI Joe comic property.
Now, I hear, that Marvel has retconned SHIELD again. Now it is a centuries old secret society that goes back to the days of Ancient Egypt and has tapped historical greats such as Galileo and daVinci in the struggle to protect the human race. Yuck. I liked it much better when SHIELD was a mysterious, hi-tech paramilitary organization.
Thank goodness for Hollywood. They like to keep the licensed properties simple. The Iron Man movie version of SHIELD is a US government operation and will probably not reference ages old 'secrets man was not meant to know." Sam Jackson's Nick Fury will just be a gun-toting badass like he was meant to be. And obviously, it is meant to be the glue for the 2012 Avengers movie and provide an excuse for Iron Man, Thor, and Captain America to come together with other marvel heroes.