What type of data is getting stored in Apache Cassandra (like caches)?
Cassandra is used by Pega by Decision Data Store DDS. In this case, you can consider the data like a database table.
It is being used by Event Strategy also but haven't details about what is stored.
Your question is hard to answer because it depends how you use Pega. You may use DDS which is used temporary by your dataflow and in such case we could say it is like a cache.
Or you may store some data permanently if you wished (for example, a list of customer).
Do we need to configure the database explicitly or will be configured as part of the installation (referring to Pega v7.x)?
You don't have to configure the database explicitly. But you may have to if you wish to configure Cassandra differently. While there may be some Dynamic System Setting to configure Cassandra, we can be pretty confident all Cassandra settings don't exist a DSS.