The blessing gives your hits a chance of 35% per hit to apply a stack of shred. You can have up to 20 stacks which each grant 5% resistance reduction against enemies resp. 2% against bosses.
Each stack lasts 4s. So if you get enough attacks within 4 seconds you will reach up to 40% resistance reduction against bosses. These information can be found in the in game guide (G) and the community guide (Community Game Guide):
Each damage type (Fire, Lightning, Cold, Physical, Poison, Necrotic, and Void) has a respective Resistance Shred ailment. Resistance Shred ailments reduce the target’s resistance for that particular damage type. By default they subtract 5% resistance and last 4 seconds. Each Resistance Shred ailment can stack up to 20 times.
Resistance shred applies before the resistance cap.
Resistance Shred ailments have 60% reduced effect against bosses and players (multiplicative with other modifiers).
As far as we know shred and penetration have the same effect against enemies and only in upcomming pvp content it will have a difference. If enemies have a resistance cap like players, i.e., at 75% resistance you could also have cases with multiple all resistance modifiers which results in less ‘efficiency’ of shred against monsters (see my example above with 100% mosnter resistance and the assumption that enemies have resistance cap of 75% like players.