A cache is a collection of copies of web pages which are stored locally, usually within a users own hard drive or within a search engines database.
Cached pages load much more quickly as a large portion of the page is stored and does not need to be downloaded from scratch.
Google marks the pages that are cached in their database. If you click on the arrow next to the url then click on "cache", you will be taken to a copy of the page as Googlebot has indexed it. This is a very useful feature for discovering cloaking.