iPhone Baseband

iPhone baseband is essentially the cellular modem firmware that is on your iPhone. You’ll probably have heard of baseband upgrades, the purpose of these upgrades is to improve the functionality of the cellular modem and also to keep the device locked to the intended carrier (Like in USA, AT&T & Verizon).

This is why iPhone unlocks are updated and specific to different baseband versions, since ‘hacking’ the baseband is necessary to allow the jailbreak and unlocked iPhone to utilize the cellular modem on the phone, thereby allowing call, data, and SMS transfer to occur on the device.

iPhone Firmware

Firmware is the name given to the set of programs that are an integral part of the operation of a computer’s hardware. They enable to hardware to function properly and allow software to run on the hardware.

It is called firmware because it’s not software (i.e., the programs that users run on the computer), but it’s also not hardware (the physical objects that make up the computer).

On the iPhone, firmware is the set of operations and tools that sit between the hardware that the phone uses and the software that runs on the phone. It enables features, fixes bugs, and attends to the functioning of the phone.

Periodically, Apple releases firmware updates to add new functionality to the iPhone, correct problems with it, and close security holes.

iPhone Jailbreak

Jailbreaking the iPhone is nothing but allowing third party applications to get installed on the iPhone. When an iPhone is said to be jailbroken, the owner can install any version of firmware, software or third party applications on it.
In essence, jailbreaking your iPhone means freeing it from the limitations imposed on it by AT&T and Apple. You install a software application on your computer, and then transfer it to your iPhone, where it "breaks open" the iPhone’s file system to allow you to modify it.
It lets you do everything from customizing the look of your iPhone to installing third-party applications and customized ringtones on it. Depending on how far you're willing to go, you can do even more than that: Jailbreaking even lets you to unlock your phone so you can use it with a carrier other than AT&T.
Once you do it, you're on your own. You may have voided your warranty, so you can't rely on AT&T or Apple to fix any problems you encounter. All of the applications that jailbreak your phone are unauthorized and could damage or completely disable your iPhone. Your slick smartphone could end up as nothing more than a very expensive paperweight.

iPhone Unlocking

iPhone Locked means that they are "locked" to a particular network. In the iPhone's case, that's AT&T for the US, O2 for Great Britain, and so on. Should you want to use your iPhone with another GSM carrier, you need to unlock.

Unlocking lets you place calls with any GSM carrier by inserting different Subscriber Identity Modules (SIMs) into the phone. Normally these SIMs from unapproved carriers won't work. When your iPhone is unlocked, just buy a local GSM-compatible SIM, place it in your phone, and make your calls. You'll be able to use your iPhone around the globe without paying exorbitant roaming fees.

iPhone Activating

In order to being using your iPhone, you have to activate it. While setting up the original iPhone and iPhone 3G required using iTunes, newer models are activated and mostly set up in the store.
The newer versions of iPhone do not require Activation...