Baking can mean a lot.

You can bake shadows directly into a texture (given you have no tiling uv-map).
You can bake shadows into a lightmap and apply it via second uv-map to have both, tiling UVs and shadows.
You can bake ambient occlusion into textures.
You can bake textures from a high poly model with procedural textures.
You can bake normal maps into a lowpoly model texture from a high poly mesh.

So actually it means that you bake, carve or store informations from something complex into something less complex.