When you access a webpage on a given website the details of that webpage are stored on your computer. The details are stored in the cache directory of your web browser (Mozilla, Microsoft Explorer, Firefox, Google Chrome).
Why is caching used? Every time you need to look at the webpage you essentially access it from your own computer which means your access to it is much quicker than your computer retrieving it from a remote server half way across the world. The webpage that you have stored on your machine is only updated when there is a change in the content on the webpage of the website you are looking at.
Internet Service Providers also use caching on a large scale as this will in turn reduce the amount of traffic being put through and lessen the burden on bandwidth being used and server resources as the traffic can be routed through different servers at different times.
As for static websites this can work well however other websites that have live information this can prove to be problematic. Take for example a website that displays live share information or News bulletins – using caching which is not updated more regularly may result in the delivery of out-of-date webpages.