Baloo is the next generation of the Nepomuk project. It's responsible for handling user metadata such as tags, rating and comments. It also handles indexing and searching for files, emails, contacts, etc.
The Nepomuk project started as a research project in the European Union. It was build completely on top of RDF. While RDF is a great from a theoretical point of view, it is not the simplest tool to understand or optimize. The databases which currently exist for RDF are not suited for desktop use.
The Nepomuk developers have tried very hard over the last years to optimize the indexing and searching infrastructure, and they have now come to the conclusion that Nepomuk cannot be further optimized without migrating away from RDF.
RDF also heavily relied on ontologies. These ontologies are a way to describe how the data should be stored and represented. They used the ontologies from the original EU research project - Shared Desktop Ontologies. These ontologies were not designed from a performance or ease of use point of view. They are quite vague in certain areas and often duplicate information. This leads to scenarios where it takes forever to figure out how the data should be stored. Additionally, since all the data needs to be stored in RDF, one cannot optimize for one specific data type.
Given these shortcomings the Nepomuk developers decided to drop RDF and rechristen the project under the name of Baloo.
Nepomuk was used to store the tags, ratings, and user comments in Files. This data can be migrated by running the nepomukbaloomigrator. Nepomuk was also used to store indexed information about Files, Emails and Contacts. Baloo shall reindex this information directly from the source.
Please note that Baloo is not a drop in replacement for Nepomuk. Since Nepomuk relied on RDF, they way applications used it was very different than how applications will use Baloo. Nepomuk was often the central storage medium in KDE. Baloo does not have one central database.
Nepomuk and Baloo can both coexist perfectly. However, it may not be the best idea to run both of them on the same system as they both would then be indexing your files, emails and other data.
Tags, ratings and comments will be not be synchronized between Nepomuk and Baloo after the initial migration.
Applications relying on Nepomuk will have to migrate to Baloo. Their progress can be tracked over here - http://community.kde.org/Baloo/NepomukPort
The Nepomuk project will not be ported to Qt5 and KF5. The Baloo project will be ported to KF5. This ported version of Baloo will continue to use the same database as the KDE4 version and will be completely compatible.