A cache is a temporary holding place for information. In the case of a processor, the cache is important because the processor is frequently the fastest component in your computer, and so it can use this space to store information while waiting for the rest of your computer to access it. While this information is waiting the processor is then free to work on other things, thus the cache speeds up your overall processing speed. In terms of how much is good, the answer is basically the more the better! Today there isn't just one CPU cache but several, and it ramps up in size; the bigger the final size (L3, currently) the better.