A cloaking device is a form of stealth technology that uses selective bending of light (and other forms of energy) to render a starship or other object completely invisible to the electromagnetic spectrum and most sensors. A cloaking device uses particle radiation to alter the molecular structure of matter in order to allow light and sensor signals to pass through it.
The advantages of a cloaking device are obvious; a cloaked ship or fleet can approach a target undetected, and at the opportune moment de-cloak and launch a surprise attack.
The disadvantages of a cloaking device are many, however, explaining why so few races employ them. Not only does a cloaking device require immense amounts of energy, but it also needs to be tied into the deflector shield grid, thus barring the simultanous use of cloaking and shields. Finally, the energy requirements of a cloaking device more often than not means that a cloaked ship cannot fire its weapons- it simply does not have enough energy. This is not universal, however - the Calandrian Steel Knife-class Light Cruiser is known to be able to fire its weapons while cloaked, although this reduces the effect of the cloak since the trajectory can be calculated, and the position of the cruiser can thus be discovered.