Every time someone visits your site there’s a lot of stuff that needs to be processed by the server. PHP code is being ran, queries are being made to your database and in the end the HTML of the webpage is generated. The image below does a great job in explaining how this works..
WordPress Internal Functioning
Sourav from WPExplorer.com does a great job in explaining what caching means for WordPress:
What if your dynamically generated web pages were saved in the server’s hard disk or memory (RAM) and served from there, every time someone requested the page? Be it one or 1000 people, that same page would be sent! That would save a lot of database queries, PHP code execution, thereby saving the most important factor – precious computation time. It would be really, really fast.
This is WordPress caching. Reusing previously generated data (or requests such as database queries) to speed up new, subsequent requests.
Why do I have to sometimes purge my cache?
When new posts, pages, comments and other activity takes place on your community. That being said sometimes you might encounter situations where you install a new plugin or make custom changes to your site which are not immediately displayed. In those cases you want to purge the
Purging the cache essentially means re-caching all previously cached data. This means the old ones are are deleted and new ones are created or regenerated.