It seems that there was a misunderstanding on my side about the cache dependency for which I apologize. With the cacheDependency element of the dataAccess node you control the cache dependency behavior.
Cache dependency is a technique used to track changes for objects subscribed to it. It is realized as a handler and any objects can subscribe to it. Any objects can also notify the cache dependency for changes and it would update its information (if it preserves it in a database) and on its turn would inform any or all of the subscribers about the change. The Mode attribute of the cacheDependency element:
<cacheDependency mode="InDatabase" />
is used to specify how this technique would be realized. It has the following values: InDatabase and InMemory. When InDatabase is selected, it stores dates in the database and checks against the current date for any changes. The InMemory mode uses notify functions called on every change. Therefore, when you are working in load balanced environment, you should use the InDatabase mode as there are more than one processes and they cannot notify each other.
The caching attribute inside the telerik/cms element:
is used to specify whether the page caching would be switched off or where the page rendered output would be saved. It takes the values None, InMemory and InDatabase. When None is selected, it turns the cache off no matter if you specify some page to be cached from the user interface. If the InMemory mode is set, the output is preserved in the memory. If the InDatabase is chosen, the page output goes to the database. The InMemory mode offers better performance but if you are limited from memory, it would be better to switch to database mode.
Hope this gives you a better glance over the cache dependency and how it is realized in Sitefinity. Once again I am sorry for misleading you earlier. Hope it did not cause you any trouble.
the Telerik team