This proposal is designed to address the problems with the current inline box model. That the way in which the specification is implemented results in absurd results - where elements are inline that have a small font size, they can distort the line box height. They necessitate an arbitrary value for the baseline of the spanning element. That backgrounds are implemented in an ugly way.
Text is aligned with respect to the line box.
This is a P element. This is a P element. The em square is the box in which glyphs are placed. Every line box has a baseline. Elements that do not have baselines will have their bottoms aligned with this point.