This setting works much like the <base href=""> tag. It defines the base URL to be used for all resources loaded in the editor area, including images and links.
This is quite useful when you are working in a Back Office system that produces contents to another site (different domain). So if you set this option to "http://www.mysite.com/", for example, and you have an image with "src" pointing to "/images/myimage.jpg", but you are using the editor in another domain, like "http://bo.mysystem.org", the images will be loaded from "http://www.mysite.com/images/myimage.jpg".
FCKConfig.BaseHref = 'http://www.mysite.com/' ;