The Capsule is an item in all three games. This item is relatively small and when thrown it releases a different item. If thrown at an opponent, it can also KO them if they are weak enough. It has a 12.5% chance of exploding like other containers. They are functionally similar to Super Smash Bros. Melee's eggs, but they can't heal the player.
If thrown and hits an opponent it does 15-18% damage and little knockback. When dropped it does 10-15% damage.
If thrown, hits an opponent, and then explodes, it does 20-22% damage and has high amount of knockback.
Another way to open the capsule is to hit it.
Like other container items, this item explodes more without any items on.
King Dedede has a small chance of throwing a capsule with Waddle Dee Toss, even with the item frequency set to none (though not if the items are directly turned off). If King Dedede is holding a capsule and uses Waddle Dee Toss, the capsule will be thrown.
A small item filled with...items. Break it open to get what's inside. However, there's a 12.5 percent chance that a capsule will contain explosives, so it's important to think about where you're throwing the capsule to break it open. You won't find crates or barrels in capsules, but you may find capsules within barrels and crates.