transcoding, when required, is always done at the server end, regardless where the server is
plex on a shield should be able to direct play almost everything you can throw at it.
when it will need to transcode is if you are playing a 4k source file on a non 4k TV. the server will have to transcode the file down to to suit the TV. and that's when you need the correct CPU in the server (be it a NAS or a PC or whatever). underpowered CPU and you'll get stuttering playback as it isn't capable of transcoding on-the-fly quick enough.
this thread about 4k content and plex is a good read
NOTE: for 2022 – Plex has come a long way since this FAQ was originally written, HW transcoding has become more available and more stable, and tone mapping was recently added to address the hdr/sdr color conversion issues. The first 4 ‘rules’ generally are no longer as important as they once...
forums.plex.tv
but essentially, if you can't direct play 4k content then you shouldn't have 4k content.