L1 cache has fast transfer rates, small in size -> most frequently used instructions & data
L2 cache bigger in capacity, slower in speed -> data and instructions that are needed less frequently.
Level 3 cache located outside CPU core -> slowest, much larger (up to 50 mb).
When the CPU searches for data, it looks first in level 1 cache, then level 2 and then level 3. If the data has been found, this is called a 'cache hit'. If the data is not found then the CPU searches in RAM instead which takes more time - this is called a 'cache miss'.