Q:

What is the significance of baud rate in stty settings on linux?

I am wondering what the baud settings have to do with my terminal settings. How is the baud speed affecting my terminal? Shouldn't the terminal do more with CPI i.e. character per second settings? Is it having any historical significance?
AFAIK, stty command is used to change and print terminal line settings (man stty)
and, baud refers to how many times the voltage/signal level changes per second.

A:

stty gets/sets IO characteristics of terminals, both physical and virtual. Because of this, it can set parameters that will have no actual effect, like the baud rate of a virtual terminal.
First you have to understand the types of terminal on Linux systems:
Most of the terminals you will see will be pseudo (virtual) terminals, and live in /dev/pts. These are sometimes called ptys for short. Any sort of software terminal lives here, whether it be a remote login via SSH or a local terminal emulator.
A tty (/dev/ttyX) is a local console emulated by the Linux kernel. This is the kind of terminal you use in Linux's virtual terminals. getty is the program used to show a login prompt and start a shell on these terminals.
A serial or USB serial tty (/dev/ttySX, /dev/ttyUSBX) has a real baud rate setting, and corresponds to real hardware. This is the real reason stty has a baud rate setting, and unlike virtual terminals, will be affected by changes you make to the baud rate. 

