The Cape slot, as seen on the right highlighted in red, is used to show equipped capes. Capes can vary from low tier capes such as the team capes to high tier capes like the TokHaar-Kal and Capes of Accomplishment .
The Cape slot is partially independent of other slots. Any item equipped to the Cape slot will not interfere with other slots; however when playing Castle Wars the Hooded cloak will add a hood to the player. You cannot put anything on that will use the Cape slot when you are playing Caste Wars or Soul Wars mini-games.