The witch cloak is a holiday reward from the 2008 Hallowe'en event. It has no bonuses, and is part of the witch costume, which also includes the witch top and the witch skirt.
It is no longer possible to obtain a witch cloak, or any other part of the witch costume. During the 2008 Hallowe'en event, players had to go trick-or-treating in Rimmington, Port Sarim, and Draynor Village to receive candy from certain NPCs. For this part of the costume, four chocolate drops needed to be received. Maggie would give you the item when you had all the chocolate drops.
Male characters cannot wear the witch cloak, or any other part of the witch costume. Male characters would receive a warlock costume, and if they try to put a witch cloak on (if they changed their gender), it will turn into warlock cloak. If a female character tries to wear a witch cloak while changing gender, it will also turn into a warlock cloak.
In the members-only costume room of a player-owned house, the witch costume can be stored in a toy box.