Not just that, but it basically makes the library incompatible with serverside rendering a la Next.js. We actually explored using Shoelace for a project but ended up having to choose something else instead because of this.
True, it completely relies on client side rendering, and it's impossible to render it server side. With disabled Javascript it doesn't show anything at all.
I would really like to use it, but using it feels like limiting your options much more than necessary. Even the CSS-in-JS based libraries (like React MUI) allow SSR to some extent.
We settled on Chakra (https://chakra-ui.com/). Although we also abandoned our ambitions of a Next.js migration, so... I guess it didn't really end up mattering all that much anyway.