In the KDE menu in the Knoppix live CD, I saw there is a submenu somewhere with the title 'shells' and another with the title 'xshells'.
It sounded to me like they are two separate families of shells.
What is the difference between them?
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A shell is a command line application that prompts the user for commands and then executes those commands.
"X Shell" is another word for "terminal emulator". It's a graphical application that allows you to run a command line application inside it and thus allows you to execute command line applications in a graphical environment.
When you select an entry in the Shells menu, the selected shell will be started in your default terminal emulator/xshell. When you select an entry in the XShells menu, your default shell will be started in the selected terminal emulator.