You have not chosen to use a compact storage format for your cache output.
Choose Compact as the storage format. You can do this in the Caching page of the Service Editor dialog box.
Ignoring this warning means that your cache will use the Exploded format.
You can choose whether to group your tiles for more efficient storage and mobility or store each tile as a single file. These are the storage options:
In Compact format, each file in the cache contains a bundle of tiles. The bundles are 128 tiles wide by 128 tiles high, containing a maximum of 16,384 tiles. Compact caches copy much faster than exploded caches, and they take less space on disk.
In Exploded format, each tile is stored as a file on disk. This makes it easier to see the tiles as they're added to your cache; however, it results in larger caches that take longer to create and can be cumbersome to copy.
The enormous number of files and folders in an exploded cache can sometimes cause inefficiencies in copying utilities, including Windows Copy/Paste. For this reason, compact caches greatly reduce cache copying time. If you have an automatic cache update workflow that creates tiles on a staging server and copies them to a production server, it's recommended that you use compact caches. Additionally, if you have limited disk space available, you should use compact caches.