Obsolete: This article refers to an aspect of the game which has been removed. It is retained for historical reference only.
A cloak of stealth is a cloak which grants a +50 bonus to your stealth score. Note that this stacks with the stealth bonus for elven cloaks, so such a cloak provides 70 stealth.
It's better than no ego, but stealth isn't particularly useful except to stabbers. It's generally superior to a cloak of darkness, but worse than one of preservation or poison resistance.