Baselines can be modified after placement either directly on-screen or via the Object Properties > Special > Lettering docker. With the exception of Free Line and Free Line Vertical, baselines allow you to set the final length of the finished lettering. Once you have placed a baseline, EmbroideryStudio attempts to fit all the letters without altering the baseline length.
Tip: As a baseline is filled with letters, letter spacing decreases. Eventually, letters may overlap. If so, you can adjust the baseline length to accommodate them, or change the lettering width in the Object Properties > Special > Lettering docker.