Baking' usually refers to rendering a lightmap and subsequently applying it to a tiled texture. This the technique used to export a high quality lightmap for realtime rendering. But this is a wasteful process because it generates a single very large texture (tiled texture +lightmap), much larger than if you tile a regular texture and then apply a low res lightmap texture as a second layer in the shader. (which is the process traditionnally used in Uru)
In details that mean that if you choose to actually 'bake' your lighting on a wall you'd first have to tile your texture to fit the whole wall (let's say you have to tile it five times) and then apply your lightmap. The good side of this is that your lightmap is of the same resolution as your tiled textures so it looks crisp and clean. The down side is that you end up with a texture that's 5 times larger than your original texture.
In the 'early days' of PyPRP Ages some people baked their lighting when working with Bryce or Terragen. That resulted in really nice lighting (with bumpmapping) but it also resulted in huge textures.

There was one particular landscape that was made in Terragen that looked really good.. Can't remember the name.(or who did)
[edit]That was Niveerah! I can't find the author, but if memory serves me right that'd be Trylon. (we really need a database of released Ages

)