Factory Set refers to a specific distribution method of baseball cards. Rather than being released into packs at random, a full set is placed in one box and sold for one price.
The first factory sets appeared in the 1980's based on the success of selling hand collated sets in order by mail catalogs. In 1986 Topps first began distributing the flagship brand in factory set form. In 1984, Fleer released an update set directly to hobby shops that was to be sold as a set. Many other smaller sized sets were sold in a factory box at retail outlets, for example 1992 Score 100 Rising Stars.
As the years passed some sets were sold retail only, others hobby only, in some years there were different factory sets for hobby and retail outlets. By the early 1990s, special insert sets were being included in the boxes (for example the 1992 Fleer Lumber Company set). By the late 2000's, Topps was releasing team specific factory sets with special insert sets.
In the current market, for the most partonly the main flagship sets such as Topps and Donruss are released in factory set form. Other limited edition sets are also occasionally available as a factory set.