This is the device in the iPhone that manages all the functions which require an antenna. The baseband processor has its own RAM and firmware in NOR flash, separate from the ARM core resources. The baseband is a resource to the OS. The Wi-Fi and Bluetooth are managed by the main CPU, although the baseband stores their MAC addresses in it's NVRAM.
You can check some Baseband Commands too (by pH and EvilPenguin).
This is the area in the baseband where the lock state is stored.
0x400--NCK token 0xB00--IMEI 0xB10--IMEI signature 0xC00--Locks table
Many of the sections are encrypted using TEA based off the CHIPID and NORID. See NCK Brute Force for more info.