IRCds such as InspIRCd and UnrealIRCd speak of cloaks in the sense of user mode +x, commonly set on connection, which scrambles an incoming user's hostname/IP address to e.g. hidden-5npgt1.iinet.net.au or hidden-qjia2j.ncp0.j4h4.014d.2804.IP.
Freenode, nota bene the largest IRC network right now, uses cloaks to instead refers to a special format of vHost[1]. It does not offer Unreal-style cloaking.
I imagine this difference in terminology is what's prompted this exchange.