Why they using caching? when will use caching in asp.net

Just like Session State, Application State, View State, etc... which are the core parts of State Management of any application... Caching is also a technique of managing the state of an application.

Suppose you request for some information on a page, then that data/information can be used in the Cache Object (storing the data in Server Memory). There are various ways of caching
like - 

1. Output Caching.
2. Data Caching.
3. Programmatic Page Caching.
4. Caching Page Fragments.

To get more information on these caching techniques, check out these links... 

http://www.exforsys.com/tutorials/asp.net/caching-in-asp.net.html

http://www.codeproject.com/Articles/6158/Caching-in-ASP-NET

http://msdn.microsoft.com/en-us/library/06bh14hk(v=vs.71).aspx

http://www.youtube.com/watch?v=x9Zc0lRpPkE

http://www.codeproject.com/Articles/334277/A-Beginner-s-Tutorial-on-Caching-in-ASP-NET

Hope these links help you 

Caching is just a process of cache some data on temporary memory and use it again and again to avoid server round trips.
types of caching:
1)Fragment Caching:part of page get cached.
2)Page Caching:Whole page gets cached.
3)Data Caching:any .net object including dataset can be cached

Real Time Ex:
In C# corners website header (having orange colour) and footer(having label privacy policy and two coloured strip above it containing diffrent tabs) are going to be same for diffrent and multiple pages
rather than to process that amount of data each time it can be cached hence performance increases