I'm trying to get a FlyEFII electronic fuel ignition and injection system working right now, the only way to shut it down correctly is to remove power to the system. In this case with a key. Interestingly you can shut down just the ignition system which should get the same results and turning the mags off on a legacy engine but this leads to a very rough shutdown since the injectors are still metering fuel into the engine very precisely as the prop slows down. The residual heat in the cylinder ignites the fuel / air mixture at random and everything shakes like the dickens. It sure feels like it could damage something.
Which leads me to Griffster94's question. If you are talking about legacy Lycoming and Continental engines with a mixture cutoff control, the way specified by the manufacturers is to shut down with mixture first, then the key once the engine stops. This minimizes the leftover fuel in the intake and cylinders which is ideal for the reasons listed above. It's not that you're going to damage the engine, it's that you're leaving the engine in a more dangerous state than otherwise possible. Some of the older Continental engines don't have a mixture cutoff control and so the only normal way to shut them down is with the ignition key. I've never heard of those engines being damaged from their normal shutdown procedure.