Cache hierarchy is the organization of multiple levels of cache in a processor, each with different size, speed, and cost characteristics. The lowest level of cache, usually called L1, is the smallest and fastest, but also the most expensive. The highest level of cache, usually called L3 or L4, is the largest and slowest, but also the cheapest. The intermediate level of cache, usually called L2, is a compromise between the two extremes. The cache hierarchy aims to balance the trade-off between performance and cost by storing the most frequently accessed data in the lower levels of cache and the less frequently accessed data in the higher levels of cache.