Baking means saving the shadowing in a level in a skin of the related model.

Look at this video from Nowherebrain:

[video:youtube]http://www.youtube.com/watch?v=ts7sXIzw1X0[/video]

Or at this explainations:

http://www.blender.org/development/release-logs/blender-243/render-baking/

http://www.puppenheim.org/
http://www.wuerfels-welt.de
Old Game Tutorial: http://www.puppenheim.org/MITutorial.zip
Free Game Editor: http://puppenheim.org/AlienalsWeihnachtsmann.zip
http://www.puppenheim.org/blender_starting_main_settings.txt