Long story short, it's the CPU's cache. Generally speaking, the more layers and the more cache memory you have, the better the CPU (there are other factors though).
The cache stores frequently used bits of data and instructions for better performance because it's faster than RAM (Random access memory). L1 is better, then L2, and sometimes L3 cache. L3 cache can come embedded on the motherboard or can be embedded on a CPU die. To be honest I've ever used a computer with L3 cache before. :lol: