Okay. So let's first understand how the CPU interacts with the cache.
There are three layers of memory (broadly speaking) - cache (generally made of SRAM chips), main memory (generally made of DRAM chips), and storage (generally magnetic, like hard disks). Whenever CPU needs any data from some particular location, it first searches the cache to see if it is there. Cache memory lies closest to the CPU in terms of memory hierarchy, hence its access time is the least (and cost is the highest), so if the data CPU is looking for can be found there, it constitutes a 'hit', and data is obtained from there for use by CPU. If it is not there, then the data has to be moved from the main memory to the cache before it can be accessed by the CPU (CPU generally interacts only with the cache), that incurs a time penalty.
So to find out whether the data is there or not in the cache, various algorithms are applied. One is this direct mapped cache method. For simplicity, let's assume a memory system where there are 10 cache memory locations available (numbered 0 to 9), and 40 main memory locations available (numbered 0 to 39). This picture sums it up:
There are 40 main memory locations available, but only upto 10 can be accommodated in the cache. So now, by some means, the incoming request from CPU needs to be redirected to a cache location. That has two problems:
How to redirect? Specifically, how to do it in a predictable way which will not change over time?
If the cache location is already filled up with some data, the incoming request from CPU has to identify whether the address from which it requires the data is same as the address whose data is stored in that location.
In our simple example, we can redirect by a simple logic. Given that we have to map 40 main memory locations numbered serially from 0 to 39 to 10 cache locations numbered 0 to 9, the cache location for a memory location n can be n%10. So 21 corresponds to 1, 37 corresponds to 7, etc. That becomes the index.
But 37, 17, 7 all correspond to 7. So to differentiate between them, comes the tag. So just like index is n%10, tag is int(n/10). So now 37, 17, 7 will have the same index 7, but different tags like 3, 1, 0, etc. That is, the mapping can be completely specified by the two data - tag and index.
So now if a request comes for address location 29, that will translate to a tag of 2 and index of 9. Index corresponds to cache location number, so cache location no. 9 will be queried to see if it contains any data, and if so, if the associated tag is 2. If yes, it's a CPU hit and the data will be fetched from that location immediately. If it is empty, or the tag is not 2, it means that it contains the data corresponding to some other memory address and not 29 (although it will have the same index, which means it contains a data from address like 9, 19, 39, etc.). So it is a CPU miss, and data from location no. 29 in main memory will have to be loaded into the cache at location 29 (and the tag changed to 2, and deleting any data which was there before), after which it will be fetched by CPU.
