A layer above the actual geometry of the level.

It was too slow to calculate lighting in real-time, so a process executed at design-time in Unreal (at build-time in iD engines) that calculated how lights lit the level geometry and then baked those changes on to the textures that were applied to the geometry.

It's like painting the glow of a torch on to the wall once before playtime rather than actually doing it every frame. Lighting doesn't typically change every frame, so it works.