How does output caching work in ASP.NET?   

Output caching is a powerful method that enhances request/response throughput by caching the content generated from dynamic pages. Output caching is enabling by default, but output from any given response is not cached until explicit action is taken to make the response cacheable. To make a response eligible for output caching, it must have a valid expiration/validation policy and public cache visibility. This can be done using either the low-level Output Cache API or the high-level @ Output Cache directive. When output caching is enabled, an output cache entry is formed on the first GET request to the page. Subsequent GET or HEAD requests are served from the output cache entry until the cached request expires.

The output cache also handles variations of cached GET or POST name/value pairs.

The output cache respects the expiration and validation policies for pages.