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When you choose the In Between setting in the Blend Shape options, the blend shape deformer deforms the base mesh based on a sequence created from the selected targets. The order in which you select the targets determines the sequence of the animation created when you move the blend shape slider.
This feature is very useful for creating certain types of animation, such as when you want to make an object grow and change over time. The key to creating a successful blend shape sequence is planning. The targets used in the sequence should have the same number of vertices and the same vertex order. This means that you'll need to create the model that represents the end of the sequence first and then derive all the in-between targets from the final model. This way, when you create the blend shape sequence, the deformation behaves as you would expect, and the geometry is not mangled or distorted during animation.