What is texture baking?

Not sure whether this should go here or in the texturing forum. I've tried looking up information about it, but the explanations I've come across have been too technical. Can someone just tell me in simple terms what it is. Like what does it mean when someone says they baked shadows onto a sculpty? How does it work, what does it do?

"Baking" is used pretty broadly to mean something that is rendered ahead of time so that the viewer doesn't have to figure it out at display time.

For textures, it typically means that someone pulled the texture into an external 3D program and placed it on a copy of the object, set up custom lighting in that program, then saved a copy of the texture with the resulting highlights and shadows captured (that's the baking part).

Some people accomplish similar things with hand painting, and that kind of shading is often called called baked-on too.

In SL, "baking" is also used when talking about clothing layers, it means that the individual parts have been pre-flattened into a few textures so that everyone who sees you doesn't have to go through the process on their own computers. It's the same idea of handling a little bit of rendering work in advance, but this kind of baking doesn't involve lighting. (Clothing textures can have baked-on lighting just like other kinds of textures, but that's separate from the baking done by the SL viewer.)