Melbourne remains a chance to play in September but must beat the Hawks at the MCG and win its final two games of the season to force its way into the top eight.
Bailey said his men weren’t getting carried away with their finals chances but acknowledged the importance of the match against the Hawks, who are also trying to clinch a spot in the eight.
“We haven’t won too many games [and] we haven’t been in this situation before,” Bailey said of his team.
“So it’s a significant performance for us for where we’re at and how far we’ve come.
“It’s a big build-up and there’s pressure on us to perform and there’s pressure on Hawthorn to perform as well.
“So there should be a big crowd and we’re really excited about the opportunity.”
Bailey has noticed a heightened level of excitement around his group this week.
“It was blowing a gale here yesterday and we actually trained pretty well in the wind,” he said.
“I think players like a little bit of pressure as well, that little bit of nervousness coming into the game, I think that’s a great thing for our players.”
The Demons will be trying to end a run of five straight losses to Hawthorn, their most recent a 56-point thumping in round one.
Melbourne looked well off the pace and Bailey admitted thoughts of a finals berth at that time were far from his mind.
“You could have said anything to me after the Hawthorn game and I wouldn’t have believed you,” Bailey said.
“There’s still 21 games to go ... I’ve never put hurdles in front of players, I’ve never said that we can never achieve anything.
“It certainly would have been a long-distance view.”
But Bailey insists his team won’t become outcome-focused, its only objective for now to beat Hawthorn.
Stopping star Luke Hodge, who was best afield in round one, would go a long way to achieving that.
Hodge has also been quiet in the Hawks’ past two losses, and the Demons coach nominated his skipper James McDonald or one of his youngsters in Jordan McKenzie or Nathan Jones to try to curb the midfielder’s influence.
“Luke’s a star of the competition,” Bailey said.
“He’s a very important player for them. Obviously if we can nullify his importance or his stats during the game, that’ll certainly help.”
Melbourne will finalise its squad on Friday evening.
The Demons expect Brent Moloney to be available next week as the midfielder overcomes a quadriceps injury.
