Webcache is a technology which should help reducing network load and increase download speed by caching the download data at a proxy.
There are eMule users S, A, B, C on the net. Users A, B, C are using the same proxy and want the same file chunk from user S. They already entered his queue. Now eMule S sees that there are several (the exact number is discussed) requests. Emule decides to start a http-proxy-upload. It starts a kind of webserver on its TCP-port.
Now it tells user A to start downloading from http://[IP of user S]/encryptedData/28394-152/3445467.htm over his proxy. After this is finished, user A starts spreading the http-proxy-source to all users behind the same proxy and needing this filepart. So users B and C get the source and start downloading from the proxy. There's no more upload traffic anymore.
Nearly every Mod of eMule has implemented Webcache due to the high demand of the users. However the developers of the official eMule client have decided against Webcache due to "legal (and moral)" reasons (see Criticism section).
 Public proxies
Webcache was designed to be used with the proxy of the user's provider. However since it only works if several users want the same chunk of the same file at the same time and are behind the same proxy, the urge to use a public proxy is big, especially for customers of small providers, some would even like a default proxy which is set for all users. While this would probably extremely increase the efficiency of Webcache, probably no proxy in the world would be able to hold up with this load.
With Webcache only one user uploads and several users downloads, therefore bandwidth - which can be used for other uploads - is saved and download speed increased.
It is discussed if Webcache is good or bad for the Provider (see also Criticism section), supporters state, that the provider also profit from the reduced network load. Additionally it has been stated, that Webcache could be easily blocked by the provider and there is none known which does this yet, therefor Webcache either helps the provider or adds just minimal load.
Webcache has been criticised because it "abuses" proxies, especially when a public one is used instead the one of the provider. It has been stated, that if webcache would reduce the network load of a provider, they would realize this and set up a Peercache Server. Because of this, the official eMule Client will never include Webcache.
Furthermore it is discussed if the relatively little chance to get a match (chunk, time etc., see public proxies section) is worth the effort.
Since 0.48a most major mods do not support webcache anymore. Users who still want to use this have to use older versions.