The best (read: worst) example of queerbaiting that I have personally come across is Sherlock. The sexual innuendos between Holmes and Watson are rampant, blatant, and ultimately meaningless. The threatening flirtations between Moriarty (who is gay) and Holmes (who is not) are there for sexual tension as much as it is for any other kind of tension. In fact, Moriarty’s homosexuality is PART of his threatening persona. There are even episodes that provide fake outs where Holmes and Watson are NEARLY intimate...and then “oh no, it’s just a fiction made up by another character, can’t have the ACTUAL gays, that’d be too gay! But you guys were excited for a moment, weren’t’cha? Weren’t’cha? But keep watching, maybe NEXT TIME they’ll ACTUALLY kiss!” Please. Kill me. Now.
Queerbaiting is purely there to fuel the shipper fandom fires. It’s manipulation at its most effective.
To BRIEFLY play devil’s advocate, media has a long, healthy history of using sexuality to excite and manipulate audiences. It happens all over the place, it’s nothing new. But what makes queerbaiting insidious is the fact that same sex or other culturally non-normative pairings are coded as a ‘forbidden’ act. ‘Forbidden’ has a sexy side...but it is also damaging. Hetero pairings are sexy, exciting, and VIABLE - LGBTQ pairings are sexy and exciting, but only in a fantasy kind of way. The message it leaves: Don’t actually do this, kids. Find yourself a nice person of the opposite gender - we assume you identify with one gender 100%, of course. This Holmes/Watson thing can’t ACTUALLY work out; this is just for you to dream about while you go off and live a ‘normal’ life.
Any media that make obvious moves to hint sexual attraction between two characters that strongly suggests they are on the LGBTQ spectrum, and then never confirms that promise, even going so far as to claim these people were super straight all along and WE were just too stupid to see it, is queerbaiting. And it is absolutely not cool.