A bay is an area of water mostly surrounded by land. Bays generally have calmer waters than the surrounding sea, due to the surrounding land blocking some waves and often reducing winds. Bays also exist as an inlet in a lake or pond. A large bay may be called a gulf, a sea, a sound, or a bight. A cove is a circular or oval coastal inlet with a narrow entrance; some coves may be referred to as bays.
There are various ways that bays can be created. The largest bays have developed as a result of continental drift. As the super-continent Gondwana broke up along curved and indented fault lines, the continents moved apart and the world's largest bays formed. These include the Gulf of Guinea, Persian Gulf, Gulf of Alaska, Gulf of Mexico and the Bay of Bengal which is the largest bay in the world.
Another way bays are formed is via glacial and river erosion. If formed by glaciers a bay is known as a fjord. Most gulf and bays are formed by the folding of the earth's crust as well as coastal erosion due to waves and currents.
Source: en.wikipedia.org/wiki/Bay - 13.03.2012
Each bay has its own character and often a special attractiveness compared with straight shorelines.