Short answers, pulled from the story.
A bay is a recessed, coastal body of water that directly connects to a larger main body of water such as an ocean, a lake, or another bay. The United Nations Convention on the Law of the Sea defines it more precisely as a well-marked coastal indentation whose enclosed area is at least as large as a semicircle drawn across its mouth.
A gulf is a large inlet from an ocean or sea into a landmass, generally larger than a bay and typically with a narrower opening. The term was traditionally reserved for large, highly indented, navigable bodies of salt water enclosed by coastline, such as the Persian Gulf, Gulf of Mexico, Gulf of Finland, and Gulf of Aden.
The Bay of Bengal is the world's largest bay, covering approximately 2,600,000 square kilometres. Its size gives it a varied marine geology, and its origins trace to the breakup of the supercontinent Pangaea along curved and indented fault lines.
Bays form through plate tectonics, glacial erosion, and river erosion. The largest bays, including the Bay of Bengal, the Gulf of Mexico, and the Gulf of Guinea, formed as the supercontinent Pangaea broke apart along curved fault lines. Glaciers carve elongated bays called fjords, while rivers erode softer rock to create bays flanked by harder rock headlands.
A cove is a small, circular bay with a narrow entrance. A fjord is an elongated bay formed by glacial action, typically with steep sides. A standard bay is broader in definition, covering any recessed coastal body of water that connects to a larger water body.
Bays were significant in the history of human settlement because they provided easy access to marine resources like fisheries, and because the surrounding land reduced wind strength and blocked waves. Later, their safe anchorage made them preferred locations for ports and sea trade.