More than costume dress-up or Audience Participation, a Shadowcast acts along with the film when it is played in a theater with screen-accurate costumes, sets and props.
In the early days of the Rocky Horror experience, people dressed up and acted along, but not for the entire film. At that point, the props list was relegated to the smaller variety like throwing rice at the wedding scene, using water pistols to simulate rain, Flicking your Bic, throwing toast and rolls of toilet paper, and tossing playing cards as "cards for sorrow, cards for pain".
There were wide-spread, regular casts, but not necessarily described as "shadowcasts". As the cult grew, casts became more and more integrated into the entire experience, and became a standard at most theaters.
Over time, Shadowcasts began emerging at other cult films like Shock Treatment, Repo! The Genetic Opera, and Clue.
List of All Rocky Horror Cast Names is an extensive list of Shadow Casts, past and present.