There is no difference in the basic meanings. They both refer to suitcases and other containers for carrying personal items when you travel. The only slight difference is that if you take a small carry-on suitcase or bag, it would be referred to as hand - or carry-on luggage. You will seldom hear carry-on baggage, though if you said it, everyone would understand what you meant.

baggage (bags) all the cases and bags that you take with you when you travel; luggage: Example: How many pieces of baggage do you have? We had to pay extra for our excess baggage (= our bags and cases which weighed more than was allowed). luggage = the bags, cases, etc. which contain your possessions and that you take with you when you are travelling: Example: Never leave your luggage unattended. hand luggage (= small bags and cases that you take with you onto the plane) (from Cambridge Advanced Learner's Dictionary) Both are uncountable nouns