A release is an attribute of an item.  Each set can choose whether or not its items are shown in releases. Each release can then be viewed as a group or edited as a whole.  For example, if I have a set of requirements that all must meet a "release date", i may group them in a release.  A set of "user input", however, would not need to be included in any release.

Baselines, on the other hand, are not an attribute.  Creating a baseline adds an entry in the "history" of all items, showing they were baselined.  This is especially valuable when doing reporting.

Let me know if that answers your questions.