'Cache' files are files stored on the device by apps to speed up their regular activities and to remember certain user interaction related data, and are meant to be temporary, though they usually persist till they are deemed irrelevant by the apps that created them. In case of a browser, cache files may include cookies, recent history, etc. For apps like e-book readers, they may include bookmarks, recently read books, last read page, etc. Clearing cache won't usually be harmful. But clearing data can be, especially for apps like Contacts storage and Calendar storage. I have also read somewhere that Android system may automatically delete cache stored by apps if internal memory runs low.
