I've created an "Installed Build" of Unreal Engine 5.4 following the steps here: https://dev.epicgames.com/documentation/en-us/unreal-engine/using-an-installed-build-of-unreal-engine
During this process, I noticed that the output contains two folders with similar-but-different files:
InstalledDDC/ (114 GB)Engine/Windows/ (146 GB)Both contain executables and debug symbols under Engine/Binaries/, but Engine/Windows also contains the engine source code.
Which is which? I've found several people asking the same question in the UE forums, but no one seems to have a conclusive answer.
What would happen if the cache wasn't introduced in Computer Science?
Please take a reference on the same page Using An Installed Build for Unreal Engine.
While making an installed build, I guess you have passed certain cmd line options; but wait there are more, and the one that produced the InstalledDDC directory is "-WithDDC" which is by default set to true, and it states that it
"Build a stand-alone derived-data cache for the engine content and templates."
In a simple sense, InstalledDDC contains pre-computed data for things like materials, textures, and more, which makes your overall development faster. Let's consider you have a large project, and now generating the files every time will make your GPU work harder and it will be slower.
So now coming to your question, you always need a build for the Unreal engine that's contained in the '../Engine/Windows' directory as it contains binaries, executables and other files required for running, and developing the project. However for the DDC, it's not essential, but highly beneficial cause it can turn tables by caching the data.
Now to keep this answer simple and brief, I will reference this Derived Data Cache, and I'll let you decide if you need the derived data cache or not!