Why and when do you want to do this? This question is really valid because short shift almost always mean to say that you will be loosing some power and torque instantly due to being in a higher gear than it is absolutely necessary.

Tere are two main reasons for a short shift

1. The first reason is to purposefully take away torque from the wheels. Suppose it is a bump/slippery curve and it seems to be unable to utilize the full torque of the gear you would normally be in, so it might be a safer bet to be in a higher gear to reduce the likelihood of  a sudden wheel-spin, etc.
2. The second (and more common reason) is to save the time taken to change gear. May be you have a tight 2nd gear left-hand bend, followed by a long straight. You are at about 2/3 revs as you approach the apex. You can either stay in the second gear and use the extra torque to accelerate as quickly as possible or you can shift up to the 3rd gear before you need to start accelerating and sacrifice the extra acceleration for the time saving in not having to change gear.

An assessment has to be made as to analyze which would be quicker. In racing this is already tried and tested for a formula on the track you are racing on so that it can often be predecided. In rallying this is less clear, and mostly of slightly less importance.

In rallying, the main reason you would use short-shifting would be for balance rather than outright time and speed. If there is a twisty turn ahead for the next 50 yards and that you will need 1 up change in the middle of it, you can decide to get the change done before the complex twist to avoid upsetting the car mid-way through it.

Related posts:

1. Shifting
2. Dragging on Automatic Transmission
3. Gear shifting the rightway: A Visual Aid