Simply put, your "baseline" is your "target" schedule for your project. You initially build a project schedule as your best estimate for how you will deliver a product or service to your end-customer. Quality systems state that without recording a starting point, how would you measure whether you are improving or not? Isn't the goal in work (and personal life, as well) to incorporate process improvements over time?
In a formal setting, you will need buy-in from your customer and stakeholders prior to baselining the schedule and budget (the budget may be entered in MS Project or may be in a separate documentation).
Each task you enter will have a Start and Finish date, and optionally, Resources (i.e., work, material, or cost) assigned to the task. These data points will all be saved, if present, when the action to "baseline" is taken.
If you don't save data as part of your baseline, you will not be able to "measure" your progress against what was originally "planned' (i.e., the current project data always is considered what is currently planned, but may have changed from what was originally approved, which leads to another discussion on change control management).
Always remember that MS Project is a tool. A scheduling professional needs to understand scheduling theory, e.g., PERT, Critical Path, variance reporting, etc., to properly use the tool.
