As you surmised, monerod stores the blockchain, which is public information. It can reside on an unencrypted partition if necessary. The daemon does not have access to any wallet secret keys. The blockchain is stored in $HOME/.bitmonero/lmdb. Other ancillary files stored by the daemon are the log files and the set of known peers, both in $HOME/.bitmonero.
monero-wallet-cli does have access to the keys, and stores three files: NAME.keys (encrypted with your password, contains the secret keys), NAME (the wallet cache, encrypted with your secret key from the first file), and NAME.address.txt (plaintext, your standard address). These files are stored wherever you decide to create them.
The cache stores all the information which monero-wallet-cli parsed from the blockchain which is related to that wallet: incoming and outgoing transactions, key images, tx secret keys, address book, etc. If this cache file is deleted, it will be recreated by parsing the blockchain again, but you will lose what's not saved in it, such as tx secret keys, address book...
The address file is unused after creation, so you can delete it if you wish.