Caches take everything from the page level that could ever be wanted in a search (all your text, footers, headers, tags, titles), and stores this in a way that it can be searched within the site. This increases the speed of search and most importantly the accuracy of returned results from a search.
The update Caches button found in List Pages forces the stored data about that Page to be refreshed so that the newest content is included in the cache for future searches. This is a manual step that overrides automated cache updates so as to let you keep your website cache as current as desired.
TIP! Make sure you have set your 404 page Cache status inactive. You do not want your 404 page included in your cache - no-one would want to have this in their search results.