Light caching (called "light mapping" in older versions of V-Ray) is a technique for approximating the global illumination in a scene. This method was developed originally by Chaos specifically for the V-Ray renderer. It is very similar to photon mapping, but without many of its limitations.
The light cache is built by tracing many many eye paths from the camera. Each of the bounces in the path stores the illumination from the rest of the path into a 3d structure, very similar to the photon map. On the other hand, in a sense, it is the exact opposite of the photon map, which traces paths from the lights, and stores the accumulated energy from the beginning of the path into the photon map.
Although very simple, the light-caching approach has many advantages over the photon map:
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Even with these advantages, light caching is similar in speed to the photon map and can produce approximations to the global lighting in a scene very quickly. In addition, the light cache can be used successfully for adding GI effects to animations.
Of course, the light cache has some limitations:
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The following diagram shows the way the Light Cache is being generated. To get the lighting from the environment V-Ray traces many rays from the camera into the scene. Each bounce of light creates a sample in the light cache that can be used during the rendering. If one ray hits a sample that was created by another ray the tracing is stopped and the information from the sample is read instead. This speeds up the process a lot.