SHIFT+INS pastes the content of the clipboard, as you can see here. It is the same as
CTRL+V (with the difference
CTRL+V doesn't work for example in graphic terminals, there you have to use
SHIFT+INS or the middle-mouse-click-trick).
When you select a piece of text, it will be loaded to an entirely other buffer than the buffer aforementioned (it is another clipboard, respectively), and you can use it with the middle mouse button, even without Xorg, in tty!
highlight + middle click isn't an xorg thing. Many distros support it out of the box on virtual consoles (ttys) as well. (e.g., RedHat/Fedora requires a package+service called
gpm to be installed & running.) That said, each
highlight + middle click clipboard is local to its tty (i.e., you can't highlight and paste between different virt consoles and/or X).
Summarized: in Xorg you have got two different clipboards. One is reachable with the keyboard, the other is with the mouse.