It's a dark moment for Baby Yoda on The Mandalorian: after evading capture by Moff Gideon for a long time, he's taken prisoner by the Imperial baddie and whisked away from his friends. While Gideon has yet to explain in detail why he wants Grogu and what he's up to, it's slowly becoming clear that he's hoping to steal something very important from the little guy, for very evil purposes.
It's a line from Gideon at the end of the episode that really seems to confirm what he's up to. After taunting and exhausting Grogu, who's now his prisoner, he has one of his officers contact Dr. Pershing, the scientist who was last seen trying to keep Grogu alive while experimenting on him for the Client in season one. Gideon wants Pershing told that the "donor" has been secured, obviously referring to Grogu.
That seems to confirm a long-held theory that's been almost confirmed several times but never said outright: the baddies of The Mandalorian are out to extract midi-chlorians from Grogu and transfer them — and the powers of the Force that they cause — to someone else. Bits and pieces of this plot have been revealed over time. First, at the very beginning of the series, Pershing is asked to "extract" something from Grogu and argues with his boss, since the Client doesn't care if Grogu is killed during the experimental procedures. Midi-chlorians, you may remember, are essentially the building blocks of the universe in the Star Wars world: living, intelligent, microscopic organisms that exist in every living being in different concentrations. High midi-chlorian counts translate to higher Force sensitivity; a Jedi or potential Jedi, like Grogu, would have an unusually high count.
In the alternate Legends canon (consisting of materials spun off from the original trilogy but rendered non-canon after Disney's acquisition of the franchise), there's technology that allows for infusions from someone with a high midi-chlorian count to heal someone who's on the brink of death. While that hasn't been touched on yet in the main, current canon, it's certainly possible that this is the reason Gideon is after Grogu: to get a "transfusion" that will save his life or the life of some other Imperial figure.
The alternate explanation is an even scarier thought: Gideon is trying to artificially turn himself into a Jedi, or, more accurately, a Sith lord. He's already acquired a lightsaber, carrying around the legendary Mandalorian Darksaber despite being neither a Jedi nor a Mandalorian, and there's been no explanation yet as to why that's the weapon he chose. Lightsabers aren't exactly a common weapon, and they're known as a weapon used almost exclusively by Force users, so it's definitely odd that a "normal" guy, even a powerful Imperial officer, would wield one without a good reason. Pair that with his obsession with capturing Grogu as a midi-chlorian "donor," and it's very possible that he's hoping to transfer the Child's Force abilities to himself and become a full-fledged Sith to restore the Dark Side and the Empire in the aftermath of Darth Vader and Emperor Palpatine's deaths. It could be a while before we find out exactly what he's up to, but it's definitely something that will have major consequences.