I work with very large files containing many layers in photoshop. What should cache levels be set at?

The defaults should work fine for you. You can click on the use case optimize buttons for your situation (Web / UI, high dimensions, etc).

You can experiment with higher values like 6 or 8, but your machine is pretty powerful so I doubt it will make much if any difference.

Just leave it at the default 4. 

Theoretically, it affects the speed of screen redraw at different zoom ratios. It refers to the “image pyramid”, cached versions of the image at different scaling, used when calculating blending and adjustment previews.

I honestly don’t think it matters much in practice. There may be bottlenecks, but this isn’t one.

However, it is very important to be aware of the fact that blending/adjustment previews are in fact executed on these cached and scaled down versions. If the image is very noisy or “binary” (line art etc), this means the preview is based on these scaled down versions - and that introduces a lot of interpolated values that are not really there in the full data. The result can be an incorrect preview, usually with exaggerated adjustment effects. The way to avoid that is to always assess these images at 100% zoom to get a fully correct preview.