The explosive barrel is a cape obtained from hard Treasure Trails. It gives a 1/3 chance of an explosion above your target with basic auto-retaliate non-ability attacks.
The drop chance of the explosive barrel is approximately 1/100,000 per reward spot from hard clues. As hard clues have an average of 5 rewards, the per-clue chance of receiving at least one explosive barrel is approximately 1/20000 (0.005%).
The explosion does not deal damage; it is purely cosmetic.