Baggage items are capable of holding multiple storing other items while placed on the character. If any Baggage item is placed as a Primary, Secondary or on the characters back (only certain bags apply for the back), then all the contents within the bag will benefit from a weight reduction.
Quick Explanation Capacity and Weight Reduction
Example: My bag has held in the secondary slot and has 5 capacity and 50% weight reduction.
If I put a 3 weight plank inside it, this plank only weighs 1.5 inside the bag, but the capacity of the backpack is 3/5, meaning I can't put another plank in there.