Email protection

It scans files on your computer -- this includes cached files.  However, it's not an anti-spam product; it's an anti-malware product.  This means that it'll detect against malicious code in a downloaded email and it'll detect many phishing campaigns in downloaded email, but it won't block generic spam, and it won't block anything that doesn't touch your local storage.

So if you use Mail.app to read your hotmail, you'll be protected against malware and somewhat protected against phishing.  If you use your web browser, and it displays on screen prior to caching to disk, you're on your own.