When a mapreduce job is submitted with distributed cache options, the node managers copies the the files specified by the -files , -archives and -libjars options from distributed cache to a local disk. The files are said to be localized at this point.
local.cache.size property can be configured to setup cache size on local disk of node managers. Files are localized under the ${hadoop.tmp.dir}/mapred/local directory on the node manager nodes.