Shady means giving shade, or suspicious. A shady corner, shady plants, a shady deal.
In gardening it is a neutral technical description: shady borders need plants chosen for them, and a shady spot in July is the best place in the garden. The other sense is dishonest and probably illegal: a shady character, shady dealings — and it is a strong hint rather than an accusation, which is exactly why people use it. Note shade, shadow; and that the two senses share the idea of things happening out of the light.
1adjectiveshadyGiving shade.
“We found a shady spot under a tree for our picnic.”
2adjectivesuspiciousSuspicious and probably dishonest.
“A shady man in a long coat was selling watches from a suitcase.”
shady is a quality of shade or suspicion.
Middle English
schade
English
shade
English, today
shady
From shade + -y. Compare stq skaadich, skaddich (“shady”), German schattig (“shady”). shade comes from Middle English schade. a doublet of shadow. Cognate with Ancient Greek σκότος (whence scoto-) and σκιά (whence scia-, and uncertainly via σκίουρος squirrel).
Etymology from Wiktionary, CC BY-SA