Temporary internet files are files downloaded from the internet such as web pages and graphics/pictures and are stored on your hard drive. The reason for doing this is so that when you visit the page again you will not have to re-download these files again and the page will load much faster the second time around.
Another type of file that is stored on your computer is called a cookie. A cookie is a text file that a Website can store on your hard drive. Cookies allow a Web site to store information on a user's machine and later retrieve it. If you have noticed that when you go to a page that you visit often it remembers who you are. That is because of the cookie that site has stored on your computer.
You should clear out these files every so often to make sure you don’t get too cluttered up and so you can get rid of outdated information. You can use a program like CCleaner to clean out all kinds of temporary files.