Baking and broiling are completely different ways to cook food.
- In baking, you are trying to heat food by surrounding the food with hot air.
- In broiling, you are trying to heat food using infrared radiation.
Infrared radiation, especially at close range, has a tendency to char things (which is great when you are trying to cook steaks), while hot air does not have that tendency (which is great for cakes).
In a normal kitchen oven, what most people are interested in is baking things like cakes or biscuits. In the ideal case, what baking means is "immersing the object to be cooked in an environment of still, hot air." So if you are baking a cake and the directions say, "Bake at 350 degrees F for 20 minutes," then ideally you would place the cake in a box (an oven) that contains still air at a constant temperature of 350 degrees F. There would be little or no infrared radiation to brown or char the top of the cake.
This, by the way, is why you pre-heat an oven. The idea is to get all of the air in the oven up to the proper temperature so that the burner does not have to come on very often or for very long. That keeps the infrared radiation from the burner to a minimum. That also explains why only the lower burner comes on during baking -- the radiation that does get generated by the burner hits the pan rather than the top of the cake.
When you want to grill a steak, what you should use is a barbecue grill outside. A barbecue grill cooks with infrared radiation generated by hot coals beneath the food. If you don't have a barbecue (or if it is raining outside), you can broil the steak in your oven. When you set the oven to its broil setting, the oven turns on its top burner and leaves it on. This creates lots of infrared radiation above the food. So you put the steak in a broiling pan to catch the juice, and then place the steak very close to the top burner. Normally, you leave the door of the oven slightly open when broiling.
The broiling burner is an upside-down barbecue, with the burner replacing the coals. Broiling generally creates a huge mess inside the oven from all the splattering, as well as tons of smoke outside the oven (and therefore in the kitchen), which is why most people use the grill instead of the oven's broiler.