Final answer:
The hair on a premature baby is called lanugo, a usual protective covering that is typically shed before birth but may remain on premature infants.
Step-by-step explanation:
The fine, colorless hair that you see covering your baby is known as lanugo. Lanugo starts to grow on the fetus's face and body around the 16th to 20th weeks of pregnancy and serves as a protective layer. It is often shed before birth but can sometimes still be seen on prematurely born infants, as it typically disappears within the first month after birth. This is a completely normal part of neonatal development and nothing to be concerned about.