WCCP support on Cisco router is a feature used to intercept traffic (usually HTTP requests) and redirect it to a cluster of content engines. This feature is mainly used for webcaching or WAAS implementations. The WCCP protocol is a control protocol used by router and Content Engines to communicate with each other. It uses UDP 2049.
The main idea is that a router(v1) or more(v2) can intercept traffic (HTTP for v1, TCP/UDP for v2) and instead of sending it to the intended destination, it redirects it to a Content Engine that might have a cached version of the destination’s response. If it doesn’t, it will create a new request, get the response from the original destination, cache it and send it back to the router, destined to the client.
The redirection can be done by encapsulating the traffic in a GRE tunnel or by L2-redirect, which is done by changing the L2 address of the frames so they reach the Content Engine instead (requires the router and the CE to be directly connected). Return traffic can use the same methods, but they don’t have to match.