As a cache, it holds oft-used instructions in readiness so the CPU does not have to go out to the slower secondary cache, or to main memory, to fetch instructions. It is another temporary storage area for instructions that kicks in when the main memory can't keep up with the processor. There's no consensus at this point as to how much secondary cache a computer needs. Manufacturers generally stick in up to 256K, which seems to be the most cost-effective amount, though for some applications, such as graphics, four times as much, or one megabyte, may be needed to keep a really fast processor fully occupied. As for main memory, the system you bought a couple of years ago probably used Page Mode DRAM, later supplanted by Fast Page Mode DRAM, usually found today running at 60 or 70 nanoseconds.
PRAM is typically battery-powered, and when the battery wears out, computers can behave erratically.
A new system that advertises advanced types of memory such as EDO DRAM along with a generous pipeline burst cache and a couple of megabytes of VRAM is probably using other, more robust components, including a faster motherboard, than a system with the previous generation of memory technology. That means the computer with the newer memory subsystem will be be able to wring more performance out of a fast processor than the older system would. The other time you need to know about memory is when you upgrade it. Its also worth adding a secondary cache in systems where there's room for one. You need to match the speed, and in some cases the type, of memory with what's there already.