What is the "derivatives" folder in the Photos Library

On my mac, the folder: /pictures/Photos Library.photoslibrary/resources/proxies/derivatives contains tens of thousands of files -- around 30,000 or so even though I have less than 10,000 photos. Because it is CPU-intensive to scan all these folders and files, this folder is slowing down my cloud backups.

What exactly is this folder and how important is it? I'm assuming it's fine to exclude it from my backups, but would I be okay deleting it?