The shape is one of the more honest sentiment readings available, because it costs real money to express. Contango, the normal state, says the market expects current calm to give way to average conditions. Backwardation says the market thinks the current problem is acute and temporary.
Traders use the front-to-second-month ratio as a regime signal. Sustained inversion has historically coincided with the worst equity drawdowns; a flip back to contango has often marked the point at which volatility selling becomes viable again. Neither observation is a strategy on its own.
Example: front month 17, second 18.5, third 19.5 — contango, a calm market, and a headwind for long volatility holders. Two weeks later: front 34, second 29, third 26 — inverted, with the front contract expected to fall fastest.
Related: volatility-futures, volatility-term-structure, contango, backwardation