The Mandalorian episode three confirms a theory about why baby Yoda is so important
Everyone wants their own Baby Yoda: The Empire, a hoard of bounty hunters, the titular Mandalorian, Warner Herzog, Dr. Pershing, and all the fans willing to buy bootleg Baby Yoda merch. The little pointy-eared Muppet has stolen everyone's hearts and become the hottest meme/asset of the year! But why is Baby Yoda so important, at least within the fiction of The Mandalorian?
In Episode Three of The Mandalorian, we see our titular hero reluctantly bring Baby Yoda back to Herzog's Client. It's absolutely gutting, watching the little alien get dragged away in his crib by Dr. Pershing—those big black eyes pleading at Mando to come to the rescue. But, Mando takes the Beskar and goes to get a chromed out new armor fit, and when he's on his way off the planet, looking cool as hell in his new gear, our hero glances down at the little knob that Baby Yoda was playing with and decides to turn around.
At this point we don't know much about Baby Yoda or his species. In the first two episodes, we did learn that Baby Yoda is Force sensitive and a creature that the remnants of the Empire desperately want in their possession. There have been theories, of course, along with a very important discussion about if Old Yoda fucked—but still no answers about why Baby Yoda is so important.
But, this exchange provides one important detail about what the Empire wants with Baby Yoda. When Herzog's client says "Extract the necessary material and be done with it," this must mean one of two things: He either wants to take Baby Yoda's DNA for some sort of cloning experiment, or to extract the Force sensitive being's midichlorians. Previous theories have posited that the Empire wanted to use Baby Yoda to train as a Sith Lord to take the place of Emperor Palpatine (or serve as a host body for Sheev), but considering they care more about the experiment than Baby Yoda living, it seems this isn't the case.
So, are they trying to experiment on the Force or are they trying to clone Baby Yoda? I'd lean toward the latter, considering other evidence that's out there. We know that cloning has played an important role in the Skywalker saga so far. In Episode II, it was revealed that the Empire was secretly creating a clone army (based on the DNA of Mandalorian Jango Fett), that eventually evolved into what we now know as the Storm Troopers. That mass cloning was done on the planet Kamino, and in an early promo photo of Dr. Pershing, fans noticed a patch that looks a lot like the Kamino logo.
Cloning would also make a lot of sense considering the historic connections between the clone army and the Mandalorian. Plus, many fans have been speculating that Rey could also be a clone, created with Force powers in order to aid Emperor Palpatine in his return.
But, more importantly, LOOK AT HOW CUTE IT IS.