The Configuration Cache contribution creates a file containing all of the configuration parameters that are normally queried from the database for every page load. Doing this reduces the database load and improves site performance, especially when there are a lot of active visitors to your site.
Every time someone edits their site configuration from Admin ~ Configuration and hits "save" or "submit", the script writes a php file in the folder of your choice (preferably outside the www root) with all the configs from the database. When each page loads it calls the saved configs as an include file instead of querying the database each time and performing the function. Without this contribution, the configure file has to be loaded from the database on on every page load so the load to the server can be significant.