What does vary:accept-encoding mean?

It is allowing the cache to serve up different cached versions of the page depending on whether or not the browser requests GZIP encoding or not. The vary header instructs the cache to store a different version of the page if there is any variation in the indicated header.

As things stand, there will be one (possibly compressed) copy of the page in cache. Say it is the compressed version: If somebody requests the resource but does not support gzip encoding, they’ll be served the wrong content.