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I've yet to see good documentation on that.
My expectation would be when the parent shaper needs to queue, it pushes back to the child policy queues.
However, especially on earlier IOS versions, it appears to me the shaper might still maintain some of its own queues, and only when they overflow are the packets queued by the child policy. (I.e. somewhat similar to CBWFQ queuing only happening after the interface's FIFO buffer fills.)
