Vishal,
Complete details below:-
Cisco Express Forwarding (CEF) is advanced, Layer 3 IP switching technology. CEF optimizes network performance and scalability for networks with large and dynamic traffic patterns, such as the Internet, on networks characterized by intensive Web-based applications, or interactive sessions.
http://www.cisco.com/c/en/us/td/docs/ios/12_2/switch/configuration/guide/fswtch_c/xcfcef.html
http://routing-bits.com/2009/06/02/understanding-cef/
The above link would help you in better understanding what it does.
2)
If you have read this and still have some doubts please feel free to share with us.
Anyways here is some more info for you before CEF there were other two methods which were used (i.e Process Switching and fast Switching) and i believe you know the way that works. Hence to avoid this pre-build cache which two methods were used CEF was created/invented which is far better and fast method.
HTH
regards
Inayath
*Plz rate if this info is helpfull.
