Install the memecached system; large scale this is a dedicated server with 90% of the resources (*cough* RAM) is dedicated to memcached. For many smaller installations however (<10,000 nodes) you may be able to get away with memcached running on the web-server.
Once memcached is running it can cached data content for D7; if the proper modules are installed and if the other modules in use can take advantage.
Memcache is also usable for the session, the file handler is very very slow. Update php.ini or your apache.conf files.
# php.ini session.save_handler = memcached session.save_path = localhost:11211
# apache, in Directory or VirtualHost php_value session.save_handler memcached php_value session.save_path localhost:11211
drush pm-download memcache drush pm-enable memcache memcache_admin