Although all DNS servers cache queries that they have resolved, caching-only servers are DNS servers that only perform queries, cache the answers, and return the results. In other words, they are not authoritative for any domains and only store data that they have cached while resolving queries.
When trying to determine when to use such a server, keep in mind that when the server is initially started it has no cached information and must build up this information over time as it services requests. The benefit of using a caching-only server is that it does not generate zone transfer network traffic.