In Docker layer caching during CI builds, the process starts by checking if each image layer exists in the cache. If a layer is found (cache hit), it is reused to save time. If not found (cache miss), the layer is rebuilt. After all layers are processed, the final image is assembled and pushed to the registry along with the updated cache. This speeds up CI builds by avoiding rebuilding unchanged layers. The example command uses --cache-from to specify the cache source image. The execution table shows steps where base and dependencies layers are reused, but the application code layer is rebuilt due to changes. Variables track the state of each layer through the build. Key points include understanding why some layers rebuild and how cache-from helps reuse layers. The quiz tests understanding of when layers build or reuse and the effect of cache misses.