Your cart is used to hold any item marked as cargo, such as cargos of traveler's food or any item bought off a trader NPC. Cargo items (apart from food) may be sold in other towns for a profit (or a loss). If you happen to run into rogues and choose to hand over what they ask, you will lose all your cargo (carry a rod of teleportation!).
Items in your cart do not count towards your personal weight limit, but your cart does have its own weight limit and your travel speed will decrease when it is exceeded. This limit can be increased by visiting Miral and Garok and paying small medals to increase your cart size. The cost of the upgrade is initially one medal, and then increases by one for every subsequent upgrade.
In Elona+ if your cargo weight goes over your cart's limit, then you won't be able to return; this limitation is not present in regular Elona. Further, upgrading your cart's limit costs multiples of 10 platinum coins (i.e., 10 for the first upgrade, 20 for the second upgrade, etc).