Baseline is the new old
I remember the very first time I saw the reference to a "Baseline database" in AX2012. It wasn't perfectly clear what the purpose of this database was. I remember thinking it might be some kind of Foundation database or perhaps even the database holding the application code. However, the database was optional, so evidently it had to be something else.
Eventually I learned the purpose of the baseline. It was simply the replacement of "old". If you're not sure what "old" is, it is just that folder holding the previous version of the application layer files in pre-AX2012 installations. This special folder makes it possible for developers to compare elements not only against other application layers, but also a previous version of the same application layer. This can be very helpful when upgrading Dynamics AX from a previous version.
This is how compare looks without Baseline (also known as "old"):
So that is it - baseline is just the new "old". It is probably not "new" to those who have been tampering with AX2012 for a while now, but sometimes old news is also news. :-)