Shell buffers provide a history of previously entered shell commands. To reuse shell commands from the history, use the editing commands M-p, M-n, M-r and M-s. These work just like the minibuffer history commands except that they operate on the text at the end of the shell buffer, where you would normally insert text to send to the shell.
M-p fetches an earlier shell command to the end of the shell buffer. Successive use of M-p fetches successively earlier shell commands, each replacing any text that was already present as potential shell input. M-n does likewise except that it finds successively more recent shell commands from the buffer.
The history search commands M-r and M-s read a regular expression and search through the history for a matching command. Aside from the choice of which command to fetch, they work just like M-p and M-r. If you enter an empty regexp, these commands reuse the same regexp used last time.
When you find the previous input you want, you can resubmit it by typing RET, or you can edit it first and then resubmit it if you wish.
These commands get the text of previous shell commands from a special history list, not from the shell buffer itself. Thus, editing the shell buffer, or even killing large parts of it, does not affect the history that these commands access.
Some shells store their command histories in files so that you can refer to previous commands from previous shell sessions. Emacs reads the command history file for your chosen shell, to initialize its own command history. The file name is `~/.bash_history' for bash, `~/.sh_history' for ksh, and `~/.history' for other shells.