In brief, a cache dependency represents a logical dependency between a cached item and a file(s), folder(s), or another cached item(s). When the dependency is broken (i.e., the file/folder/item changes), the bound cached item is removed from the cache.
Caching has long been recognized as one of the more effective ways to improve your ASP.NET web applications.In ASP.NET 2.0, Microsoft has added the new SQL cache dependency feature.
To illustrate SQL cache dependency in ASP.NET 2.0 visit.These links will give you enough information as well as code also
http://www.ondotnet.com/pub/a/dotnet/2005/01/17/sqlcachedependency.html
http://www.eggheadcafe.com/articles/20030716.asp
http://aspnetresources.com/blog/sql_cache_depedency_overview.aspx