This belief teaches that those who would have decided to be baptised but did not know about it have been baptised. In other words, good people are not "Christians" because they never heard of the Christ are counted as Christians.
It is God's will that everyone be baptised, and He will give evidence (Biblical or natural) of the grace of God to all. Those who accept this evidence are baptised, whether or not they have heard of Iesu Nazareum Rex Iudeaeum. Therefore, many of the Indians who lived before contact were saved. Likewise, some natives who lived and died in remote places before missionaries came to them are likewise baptised.
So are all Jews and Lutherans condemned to hellfire because they heard of the Catholic church? No. It is the duty of the Universal Church to bring the "full historical revealation" of Jesus Christ to all people. Though the Church is guided by God and is the bride of Christ, it is also a human institution. The failings of men limit the effectiveness of the church. Therefore, there are non-Christians alive today who have not been baptised by water merely because the Church has not properly done its job giving them the "full historical revelation" of Jesus. Saying
Jesus is God, the Son of God, the Word of God
is a mantra, not proof. Therefore, even being exposed to the Church and the teachings it not the "full historical revealation," and so even those who have said "Jesus Christ is not the Messiah as foretold by the Prophets" might still have been baptised by desire.
The Church works tireless to bring all to salvation, but also recognizes that baptism is for everyone, everywhere, not just those who the Church has convinced.
The only other types of baptism recognized by the Catholic Church are baptism by water and baptism by fire.
This concept is a qualification of an earlier belief, Extra Ecclesiam salus non est.