This normal-appearing chapeau contains a powerful enchantment which allows its wearer to alter his or her appearance as follows:

Thus, the wearer could appear as a comely woman, a half-orc, or possibly even a gnome. 

If the hat is removed, the dweomer of the disguise is instantly dispelled, but the headgear can be used over and over. 

Note that the hat can be changed (as part of a disguise) to appear as a comb, ribbon, head band, fillet, cap, coif, hood, helmet, etc.