On GregoryWeir's website, the game's description says:
"Babies dream of what came before, of universes that are no longer there. Babies dream of dead worlds."
It makes it clearer to say that the babies are actually reincarnations of beings from other universes that have already been destroyed.
Or they're just experiencing the life of those other beings while they sleep since their brain doesn't have any episodal memory yet to be able to visualize dreams on their own.
Awesome free Portal clone, but I do wish that you can have an actual 'pause' to the game, when you've got to set the cursor free, you've got no choice but to abandon your progress in the level :(