^^^Okram: What an excellent question - thanks for asking it!!
To answer it - it's first important to understand how control modules operate. At a very general level, each of the control modules in your car are what control-system engineering calls a "
closed-loop system" and they are sometimes displayed functionally like this:
So, the thing to note about the diagram is that the system has 2 functional connections to the outside world: The module takes an "input" signal which it then modifies in some way (using a "process") to produce a output signal. The way that the input signal is modified is determined by the control module's firmware - and most importantly, it's modified by a feedback loop that constantly monitors the way that the output is being changed.
In the real world (on your car), the "feedback" in my diagram often takes the form of a sensor of some kind (i.e. a light sensor, a position sensor, a level sensor, a temperature sensor, a humidity sensor, a speed sensor, a pressure sensor, a vacuum sensor, a rain sensor etc). Your car has a myriad of these types of transducers and their job is to provide feedback to the control modules about what's happening to your car in the real world.
Now, these transducers are calibrated by their manufacturer so that their measurements of the real world are standard on all cars that roll-off the assembly-line. For example, for a temperature sensor, the manufacturer ensures that each degree of temperature rise/fall equates to a certain change in electrical resistance in the sensor. That means that all cars fitted with this temperature sensor display the correct reading (if it's ambient temperature transducer), or that the car opens the coolant flow valve at the correct temperature (if its an radiator temperature sensor)
However, in some more complex sensor networks, the calibration process needs to happen after the transducers are installed in the car. For example, the sensor network that is responsible for measuring when the headlights are level to the ground can only be calibrated after the car is built.
THIS IS THE FUNCTION OF WHAT OBD11 CALLS "BASIC SETTINGS " - it performs those calibrations on the closed-loop-systems (read "control modules") in your car that must be performed after the car is built.
So these "on-car" calibrations usually only need to be done once and the results of the calibrations are usually stored in non-volatile memory in the control module. These calibrations can be thought-of as an "initialization" of the control module - something that is needed at the start for the module to operate correctly.
But, sometimes when changing parameters within the control module - these calibrations are lost. For example, the control modules in your car have an option to take-back ALL its settings to factory status (i.e. the setting values when the module was taken from the warehouse- before the car was built). If a OBD11 user is silly enough to invoke this option (I'm being overly harsh - because usually OBD11 users aren't aware of the ramifications of this option), the initialization settings that were stored in the control module after the car was built will be deleted. Result= no basic settings. If this happens, then the initialization parameters will need to be re-established in the car so that the control module can operate correctly again. Some of these re-calibration processes can be done easily, but some require special equipment - like special aiming targets with laser alignment for calibrating the front camera for Adaptive Cruise Control.
Basic Settings are also needed if certain options are fitted after the car is built (i.e. retrofitted). For example, if a car with halogen headlight assemblies are retrofitted with OEM HID headlights (with proper level adjustment facilities), Basic setting calibrations will be needed.
Here endeth the "Basic Setting" lesson
Hope this provides some insights to your question
Don