Cache memory is a type of fast RAM that a computer processor can access more quickly than regular RAM. It stores recently accessed data from main memory to allow for faster future access if needed again. Cache memory is organized into levels based on proximity to the processor, with L1 cache being fastest as it is located directly on the CPU chip, and L2 cache being next fastest located either on the CPU package or motherboard. This memory hierarchy helps improve a computer's overall performance by reducing the time needed for processors to access frequently used data.