Buddhism spread to Western and Southern India and caves were made out of hills for monks to live in. The caves were made on the order of kings and queens and also some of the caves are made by farmers and merchants.
Location of the caves were near passes through the Western Ghats. There were roads connecting these ports with cities in the Deccan ran through these passes. The traders used to stop in these caves while they were travelling. Buddhism also spread South Eastwards to Sri Lanka, Myanmar, Thaailand and other parts of South-East Asia including Indonesia. But Theravada Buddhism, the older form of Buddhism was more popular in these areas.