Refers to a small container, often for medicine, or a sealed compartment. Also used for space capsules and time capsules.
from German Kapsel
このカプセルには粉薬が入っています。
This capsule contains powdered medicine.
宇宙飛行士はカプセルで地球に帰還した。
The astronauts returned to Earth in a capsule.
I swallowed the cold medicine capsule with water.
We sealed a small message inside a capsule and buried it.
The capsule breaks open in the stomach and the medicine dissolves.