Easiest way to explain ICO
This company "Babahaha" has came up with an idea and the problem they face is money issue.
So they need to raise funds so they need people to contribute in return you get tokens to keep and those tokens has benefit for early contributors.
You can be
Long term investors - keeping the token knowing their benefit and stuff you study about the company.
Short term investors - knowing the surface and sell it when it hit the exchange
So always know what is the ICO about before paying or submitting your KYC if needed