How does caching work?

This question may be too complex for a reasonable answer on this list, but I'll ask anyway. If a page has static content (no PHP variables, etc.), I can understand how caching works. The engine just checks to see if it's got a copy of the requested page in the cache, and displays it if so, or fetches it if not. But if a page is populated with variables from a database (for example) which could change from time to time, how could a caching engine possibly cache it? How would it determine whether to re-fetch the page or use the cached version? Paul -- Paul M. Foster