Speculation steadily built for months on which left-backs would represent Hodgson's side in Brazil this summer.
Everton full-back Baines was always considered a certainty, although the battle between veteran Cole and 18-year-old Shaw went down to the wire.
Hodgson's decision to plump for the Southampton left-back led to Cole's immediate retirement from international football after 107 caps and the end of an era, but Baines believes it is the start of an exciting new one.
"It was obviously something that was talked about," he said. "There were three options available to the manager, lads that have been in the squad.
"Eventually he was going to have to pick two of the three and in the end he has picked me and Luke, and Ash has missed out this time but I think he could have easily picked any two of the three, really.
"With everything Ash brings to the table, his quality and experience, it is a big vote of confidence for both me and Luke.
"I think everyone has seen over the years the performances Ash has produced at international level, so to leave him out and bring me and Luke is a big vote of confidence for the both of us.
"Luke has been fantastic. There has been a real positive emergence of young talent in the country that I think everyone is now excited to see developing.
"Luke is one of those at the forefront and he is going to be a top, top player and around these England squads now for the same amount of time as Ashley Cole has done."
Baines and Shaw are currently in the Algarve, where the 23-man squad and two of the standby players, Jon Flanagan and John Stones, are at a pre-tournament training camp.
The Everton defender knows just how those back-up players feel, having made the 30 for the 2010 World Cup in South Africa, only to miss out on the final cut.
"It is great to have made the 23. Last time I was in the 30 and it was a bit of a late run to try and make it as I had not been around the international stage for long," said Baines, who warned that nobody is guaranteed a starting spot in the team.
"You have to keep on your toes and not get complacent because if you don't do the right things then you are not going to be playing.
"Things can change very quickly so I think whoever starts the first game in the tournament has to do the job otherwise they are not going to stay in the team."