Cache, pronounced cash, is a temporary storage place inside your computer for frequently or recently accessed data.
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A cache, in computer terms, is a place to store information that's faster than the place where the information is usually stored. Cache memory is fast memory that is used to hold the most recently accessed data in slower main memory. The idea is that frequently accessed data will stay in cache, which allows the CPU to access it more quickly, which means it doesn't have to wait for the data to arrive.
In reference to your processor, the Cache Memory is the Processor's internal quick-hand storage that it uses for things that it's currently processing at that given time.
As with most things, the more cache memory a processor has, it will usually run smoother and faster than one with less of about the same operating frequency.