Removes most poisons and diseases as well as curses and magic effects.
As it removes harmful spell effects instead of dispelling them, Cloak of Shadows does not trigger effects that trigger on dispel such as [Unstable Affliction].
Cannot be used to break Fear-type effects or [Polymorph], since technically you are controlled and cannot use your skills.
Can be used to remove the daze effect of [Blast Wave] (being it is removing a harmful spell's effect).
Cannot be used while under the disorient effect of [Dragon's Breath] (as you are not in control of your actions).
This is great to use when that mage used [Living Bomb] on you, so keep it handy.
Tips and tactics
Now that [Shadowstep] can be used during a fight, it can also effectively counter casters. If you see a caster's hands go all glowy and their cast bar appears, wait until the spell is nearly complete and then Shadowstep behind them, they will instantly lose sight of you and you have the upper hand again. This may save your Cloak for when you really need it against another cast or the Rogue's best friends, Warlocks.
This is a rogue's trump card against casters. Learn when to use it for maximum effect. For instance, if a mage uses Frost Nova and starts casting a long spell, let them get near the end so that they waste their time. Let DoT you up, then clear all their DoTs when the Fear wears off. They may forget to apply them again, or may not have time.
Doesn't break Stealth when used. To escape a priest or warlock that you don't wish to fight, Vanish in between DoT ticks and quickly apply Cloak of Shadows.
Some mobs that use [Mind Control] will foolishly use your Cloak of Shadows, and you are freed from their control. You may want to try not to use it in those fights, to keep it off of cooldown.
Many bosses apply painful debuffs. As you are probably already last in the decursing pecking order, so be sure to use your Cloak when you can (and quickly, before someone tries to cleanse you).
Certain PvE debuffs like the Impending Doom DoT applied by Epoch Hunter in Caverns of Time: The Escape from Durnholde which are known to be undispellable are in fact removed by Cloak of Shadows.
There are also certain PvE debuffs that Cloak of Shadows does not remove, for example the Curse of Vulnerability that Rift Keepers, in Caverns of Time: The Dark Portal, cast. This has been reported, has been called a bug by GMs, and is currently being "worked on".
Patch 2.1.0 (2007-05-22): The tooltip has been adjusted to indicate this ability removes hostile effects, rather than dispels them. Cloak of Shadows does not count as a dispel, and will not interact with dispel resistance or effects triggered by dispelling. This ability no longer removes the Weakened Soul debuff.