The "official" reason that capes (a part of pre-alpha ESO) were scrapped was because they essentially caused performance issues.

If ZOS cared enough, they could add capes to your character skeleton. Think of how Argonians and Khajiits have tails..... well a cape could be coded the same way. Maybe you had a Nord character sketeon, but now when equipping a cape you switch to a Nord With Cape character skeketon.

Applying a cape is like adding a tail to a character, and changing the cosmetic appearance of your cape is seen by the game engine as no different than a tatoo on your character's chest.

Another way to look at it is that every character actually has three arms, but one is invisible until you equip one of the cosmetics to make it not invisible. A cape can work the same way. Every character wears a cape, but it's invisible. When you put on a cape, it is no longer invisible and gains the appropriate colors/appearance. It is already part of your body, but moves wierdly in terms of animations so it can simulate cloth. This causes zero strain on the game engine at all.

Games often do this (pretty sure I heard someone said Guild Wars was one of them?)..... but you know..... ZOS won't do it until they wanna search for a new way to make $$$. Crown Store is #1

Someone please correct me if I'm wrong. It makes a lot of sense and is very much based on what I've heard from intelligent people