Firefox (like most browsers) keeps a copy of certain things on the websites you visit, like images for example. Doing this allows Firefox to load pages that you visit regularly (or at least once) faster, which can improve performance dramatically. |
Privacy issues will relate to the fact that the files are stored locally, which means the files can be accessed and the images viewed by someone other than yourself.
Technical issues can arise with cached files. For example, if you experience difficulties with certain websites, sometimes clearing the cached files can solve it.
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