Caching of static objects. These are served much faster, assuming that your cache size is big enough to keep the most frequently requested objects in the cache.
Buffering of dynamic content. This takes the burden of returning the content generated by mod_perl servers to slow clients, thus freeing mod_perl servers from waiting for the slow clients to download the data. Freed servers immediately switch to serve other requests; thus, your number of required servers goes down dramatically.
Nonlinear URL space/server setup. You can use Squid to play some tricks with the URL space and/or domain-based virtual server support.
The disadvantages are:
Buffering limit. By default, Squid buffers in only 16 KB chunks, so it will not allow mod_perl to complete immediately if the output is larger. (READ_AHEAD_GAP, which is 16 KB by default, can be enlarged in defines.h if your OS allows that.)
Speed. Squid is not very fast when compared with the plain file-based web servers available today. Only if you are using a lot of dynamic features, such as with mod_perl, is there a reason to use Squid, and then only if the application and the server are designed with caching in mind.
Memory usage. Squid uses quite a bit of memory. It can grow three times bigger than the limit provided in the configuration file.
HTTP protocol level. Squid is pretty much an HTTP/1.0 server, which seriously limits the deployment of HTTP/1.1 features, such as KeepAlives.
HTTP headers, dates, and freshness. The Squid server might give out stale pages, confusing downstream/client caches. This might happen when you update some documents on the site—Squid will continue serve the old ones until you explicitly tell it which documents are to be reloaded from disk.
Stability. Compared to plain web servers, Squid is not the most stable.
The pros and cons presented above indicate that you might want to use Squid for its dynamic content-buffering features, but only if your server serves mostly dynamic requests. So in this situation, when performance is the goal, it is better to have a plain Apache server serving static objects and Squid proxying only the mod_perl-enabled server. This means that you will have a triple server setup, with frontend Squid proxying the backend light Apache server and the backend heavy mod_perl server.
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