It's a simple premise - caching the video will prevent your device from consuming more data should you rewatch it later on. It's a pretty smart idea, as in my experience, I've rewatched videos uploaded on Photos multiple times. The only issue I could see is if your device doesn't have much storage, in which case you'd have to clear your cache more often.
The update is live now on the Play Store, but if you're not seeing it, you can grab the Google Photos APK from APK Mirror.
Source:AndroidPolice
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