To start from the end, cache is so that the browser is MORE efficient at displaying pages. The cache are things that the browser stores, so that your phone doesn't have to a) re-prompt you for things (such as your Facebook password), and so that web pages that you've already been to can load faster (elements of web pages are stored in the cache, so you don't have to re-download them, if you visit the site frequently).
Typically, cache does clear out old things for new things. When you set a limit like that, it should usually strictly adhere to the limit. I can imagine it being set up on a site-by-site basis. So you're at 5.9 mb, and maybe the program says 'ok, just one more site', which winds up taking it over 6mb. I find it strange that it would go over an imposed limit, and I haven't seen it on mine, but I wouldn't worry about it too much.
And reducing the cache isn't a bad idea for any real reason, especially if you don't use that many different websites. If you frequent a dozen web sites on your phone's browser, having the cache be at its largest will make browsing faster and more efficient, after you visit the sites thoroughly.
The best reason that I can think of to even limit the cache to less than the maximum, is to save space on your phone. Once you have too many Apps installed on your phone, your Eris will find itself in an unfortunate place, one fateful reboot. Clearing your cache, and reducing its maximum size is a good idea if you're looking for more space for more apps. But if you're that hard up for 3MB, my advice would be to uninstall some apps that you don't need (big ones like your 40 year old virgin sound board or the app that's just a set of pictures of Models that you could open Sports Illustrated and see).
If you go Home > Menu > Settings > SD Card & Storage > and scroll to the bottom, it will show you how much space is left on your phone. I'm always happy with >50mb left. I find that even in the 30mb+ range it's okay. My Eris crashed several times when I dipped below 30MB though, after restarting the phone.
Your phone uses some of that empty space while it's booting up, and while it's running (although it doesn't tell you that without you digging deep). So just be careful how much space is left.
Cache won't hurt you, really. Having it be full is a normal and good thing. Your computer's web browser cache is probably full right now, and your web browsing experience is better for it. The same will generally be true for your Browser on your phone.
After all, these phones are mini Linux computers with web browsers.