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The Classic cape is a cape of distinction and can be obtained (along with the Classic hood) only by players that have access to RuneScape Classic. The cape and the hood are bought together from Iffie located at Thessalia's Fine Clothes in Varrock for 50,000 coins.
The Classic cape offers an emote which can be displayed by activating the Skillcape emote in the emote tab. The emote shows your character thinking about a rune hatchet.
The cape's emote is able to be used in free to play, although the cape is only obtainable in members servers.
Since Jagex has stated that RuneScape Classic will no longer be re-opened to allow new players, the Classic cape is essentially a discontinued item.