Cache memory is relatively small amount (normally less than 1MB) of high speed that resides very close to the CPU.Cache memory is designed to supply the CPU with the most frequently requested data and instructions.Because retrieving data from cache takes a fraction of time that it takes to access it from main memory,having cache memory can save a lot of time.
If the information is not in cache memory ,it still has to be retrieved from main memory,but checking cache memory takes so little time, it's worth it.

Levels of Cache :

Today, most cache memory is incorporated into the processor chip itself;however, other configurations are possible.In some cases, a system may have cache located inside the processor,just outside the processor on the motherboard,and/or it may have a memory cache socket near the CPU,which can obtain a cache memory module.
What ever the configuration , any cache memory component is assigned a "level" according to its proximity to the processor.
For example, the cache that is closest to the processor is called Level 1(L1) cache,the next level of cache is numbered L2,then L3,and so on.

Computers often have other types of caching in addition to the cache memory.For example ,sometimes the system uses the main memory as the cache for the hard drive.It's important to note that the term Cache can refer specially to memory and to other storage technologies as well.