Jack Binks (MajorKong) with a great post describing and breaking down how Nuke treats and handles caching, which as he notes is something that quite a few people can be confused about as it is a bit different an implementation that what some might be used to.
At its most basic, Nuke is caching results so that it doesn’t have to keep recalculating frames, or specific parts of your tree, in an attempt to keep working in your comp nice and snappy. The details can get rather more complicated however
Nuke can automatically create local versions of image sequences to stave off the effects of heavy local network traffic, but also to improve response. At the same time aggressive caching takes advantage of available RAM to speed up compositing, avoiding re-rendering when changing frames or moving from script editing to playback.
Jack goes in depth with Nuke’s caching ability and explains how they are used in Nuke covering Nuke Viewer Caches, Nuke Node Caches, as well as Nuke’s Localized Caches… some great stuff here, so be sure to check out the post Jack Binks calls All Your Cache Are Belong To Us, his in-depth article on Nuke Caching systems.