Can you give me a more concrete example of the use case? I'm having trouble figuring out how it would work in practice.

Sure. The following is an example that instructs the reader to install a program. The goal is to point to a concrete release, but keep the release number up to date.

Example 1:

Download the latest CLI from our release and put it into your PATH:

! new=$(curl -fsSw "%{redirect_url}" https://github.com/errata-ai/vale-action/releases/latest | rev | cut -d '/' -f1 | rev)
$ echo -e "curl -fLO https://github.com/errata-ai/vale-action/releases/download/${new}/vale\nmv vale /usr/local/bin/vale" as sh

curl -fLO https://github.com/errata-ai/vale-action/releases/download/v2.1.0/vale
mv vale /usr/local/bin/vale

However, to my current understanding, the template must currently be places in the inline shell code, which makes Example 1 quite repetitive.

Let's say we introduce a new inline shell operator &, which is similar to $, but in addition injects the code block underneath the statement into stdin. We could write the previous example as

Example 2:

Download the latest CLI from our release and put it into your PATH:

! new=$(curl -fsSw "%{redirect_url}" https://github.com/errata-ai/vale-action/releases/latest | rev | cut -d '/' -f1 | rev)
& sed -e "s|download/[^/]+|download/${new}|" as sh

curl -fLO https://github.com/errata-ai/vale-action/releases/download/v2.1.0/vale
mv vale /usr/local/bin/vale

The two lines in the code fence of Example 2 are put into the stdin of sed, so sed can just work on the content of the code block that already exists.

Might be even clearer with the following, using cat as the identity operator.

Example 3:

& cat

Lorem ipsum dolor sit amet, consetetur sadipscing elitr, sed diam nonumy eirmod tempor invidunt ut labore et dolore magna aliquyam erat, sed diam voluptua. At vero eos et accusam et justo duo dolores et ea rebum. Stet clita kasd gubergren, no sea takimata sanctus est Lorem ipsum dolor sit amet. Lorem ipsum dolor sit amet, consetetur sadipscing elitr, sed diam nonumy eirmod tempor invidunt ut labore et dolore magna aliquyam erat, sed diam voluptua. At vero eos et accusam et justo duo dolores et ea rebum. Stet clita kasd gubergren, no sea takimata sanctus est Lorem ipsum dolor sit amet.

Now matter how often you run mdsh on Example 3, the text will always stay the same, as we put the text into stdin of cat, and cat will just output it.