Memory Hierarchy gives the relationship between the speed, size and cost with respect to the distance from the Processor.
In the diagram above the peak of the pyramid represents the processor. The Register lies with in the processor itself hence are the closest to the processor and work the fastest. But the number of registers that can be included in a processor is limited, as it would lead to increase in processor size, increase in manufacturing cost etc. Thus the register memory is restricted to minimal.
A level below the register is the L1 cache or the first level cache. In the processors of today, the L1 cache also lies on the processor chip itself, though it might lie outside too.
The cache memory works at a very fast speed but is also extremely expensive as compared to the other memories available. This high cost is one of the major restriction why we can not use lots of cache in a computer even though it is faster.
The general thumb rule is, higher the cache memory faster would be the working of the processor.