diff --git a/README.md b/README.md
index b26529d..bc49fe0 100644
--- a/README.md
+++ b/README.md
@@ -12,6 +12,12 @@ Dist Git is a remote Git repository specificaly designed to hold RPM package sou
 How does it work
 ----------------
 
+### Hosting files
+
+An RPM package repository typically consists of a spec file and the sources itself. Sources are most often taken from the upstream as they are and packed as a tarball. The sources can contain large files like virtual machine images, which, in some cases, can grow up to several GB. Those binary files can not be stored in git effectively - so the Dist Git stores them in a separate place called Lookaside Cache and only a text link to the cache is stored in the git itself.
+
+### Communication
+
 The Dist Git server repeatedly asks a package database for information about packages. This information contains a list of packages and other information. Each package can have a list of users or groups entitled to commit to this package and a list of platforms for which the package is built. Sources for each platform are held in corresponding branches.
 
 User cat interact with the Dist Git server using client probably based on [rpkg](https://fedorahosted.org/rpkg/). The client authenticates with an ssh certificate for git communication and with an http client certificate for uploads to the lookaside cache.