Baking is a generic term used whenever you save out some data on a model.
In graphics, Baking can mean Lightmaps (like LightUp uses) or it can mean saving lighting to vertex colors (as you can do in Maya), or saving out skinned weights for an animation.
The general gist, is taking some 'ingredients' (aka parameters) and 'baking' (aka applying some process) that saves just the end result eg LightMaps, Vertex colors etc.
Adam