A capsule is a limited set of things, assembled for specific goals / tasks / occasions, in which all units are easily combined with each other, thereby forming a large number of looks.
Basically, a smart and functional wardrobe consists of different capsules (work / city life / outdoor activities/ occasion wear/ holidays, etc.), and it's great if many things overlap and can flow from capsule to capsule.
For example, double-breasted man's cut beige jacket can be equally functional in a work, occasion and holiday capsules.
That multi-functional way of using clothes gives us an opportunity to have an optimal wardrobe, where all things work out to the maximum.