Why is my baby bald?

"resting phase" For those who remember all the steps of mitosis from high school, they remember that after anaphase and telophase (the dna splits up to form two distinct nucleii), the cells rest. If there's a major shock to the system, the cells enter a second resting phase, then "die" while new cells pop up. Thus from birth, the hair cells enter resting phase, and hair falls out, to be replaced in a few months.
Normal event. Many babies are born normally with little or sparse hair patterns unless the skin is atrophic or thinned such as occurs with cutis aplastic but i doubt this is your child's condition as it is quite dramatic.