Capes are parts of armor that can be worn on chest, with equivalent protection to a leather chestplate. With the mod Curios or Trinkets installed, they can be placed into the back/cape slot.
Wolf Cape
Made from Wolf Pelts.
Bear Cape
Made from Bear Skin.
Crafting
All capes are crafted in the following pattern, where C is a Bear Skin or Wolf Pelt:
C C CCC C