The Birth: A bunch of runaways were kidnapped by drug lord Silvermane and were used as guinea pigs in an experiment to test a new addictive drug. Of the lot only two kids survived, though the crooks assumed that all were dead. They were Tyrone Johnson, a South Boston kid and Tandy Bowen, a resident of Shaker Oaks, Ohio. The experiment had left them "altered" - each of the two had special powers making them mutants.
Their first appearance was in Peter Parker, the Spectacular Spiderman #64 but their origin was detailed in Clock and Dagger 4 (limited series).

The Alter Egoes: Though both of them are teens they have shown a maturity beyond their age. While Cloak tends to be more dominating and strict to his code, Dagger is mild and can easily be persuaded. But both of them share a similar rage towards the people who made them what they are today; namely the drug lords, pushers, dealers, abusers and anyone else dealing in drugs.
Having a natural grace, Tandy Bowen had trained to become a dancer in her human days. Both Tyrone and Tandy ran away before finishin high school.

The Legend: Tyrone and Tandy fled from the drug dealers who assumed that all the kids were dead. Together, the duo learned of the special powers they had developed through the experiment. Powers were cool, but they longed to be normal again - a thing that would never happen. The two of them decided that they would stick together and teach their kidnappers a lesson.
Tyrone Johnson became a living shadow due to the experiment and he took the name of Cloak (very apt, since he's always wearing one). Besides being a gateway to a dimension of "Darkness" he can also teleport himself away. The "Darkness" is neither good nor evil, but can be used for either. To keep up his strength, Dagger "feeds" him with light. He can also absorb the light from people he engages within his Darkness.
Tandy is the personification of "Light", and can generate knife-like projectiles from her own abundant "Light." Because of this power she took the name; "Dagger" Dagger can over-exert herself depleting herself of energy. Her energy is restored by normal sunlight.
Both appear to be virtually immortal. "Killed" by Shriek during Maximum Carnage, Tandy was able to re-assemble herself. As a living portal to another dimension, Cloak cannot be touched or physically harmed.
As time went on, the path for revenge grew and extended to all those who made a profit from drugs. Ultimately, they did cross paths with the man who had ordered the experiments on them - Silvermane ! Shadowing Spider-Man they learned of the crippled drug lord's whereabouts and with persuasion from Cloak, Dagger dealt the final, fatal blow the Silvermane. Spider-Man had tried to stop Dagger from becoming into a killer but Cloak's will finally prevailed.
Unfortunately, that was not the end of the saga. Silvermane's doctor had already planned for his death. He got him inside a cybernetic body. With new born strength, Silvermane went for Cloak and Dagger with blood in his eyes. Again, with Spider-Man's help, the duo of darkness and light was able to stop him.
Cloak and Dagger have stayed together mainly because they need each other. They fought a few other villains on the way - mainly because they were either involved in drugs or they came after the duo themselves. The have fought the likes of the Answer, the Kingpin, Silvermane, as well as Spider-Man. There was a time when Dagger became human again, but the change was not to last forever. Dagger is also a reserve team member in the New Warriors. The duo confide in people like Father Francis Xavier Delgado and Detective Bridget O'Rielly. Spider-Man has also been their ally more often than their foe.