The "Baldur's Gate" series is based on the second edition rules for "Advanced Dungeons & Dragons." The Paladin, one of the available classes, is a warrior that champions the causes of good and justice. The first game only had the basic class option of Paladin available. "Baldur's Gate II" added class kits, which alter a class by giving it extra advantages and disadvantages compared to a normal member of the same class. The Cavalier is one of the three character kits available for the Paladin.
Only humans with the lawful good alignment can become Cavaliers. In addition, the character must have a strength score of 12, constitution score of 9, wisdom score of 13 and charisma score of 17. These requirements are not unique to Cavaliers. All Paladins must meet these requirements.
The Cavalier is supposed to represent the classical chivalrous knight. To illustrate this, the Cavalier gains bonuses that are mostly beneficial for fighting demons and dragons. When fighting a demon or dragon, the Cavalier gains a bonus of 3 to any die rolls made to determine if an attack hits and how much damage it does. He also is completely immune to fear, morale failure or poison status effects. He can remove the fear status effect from other characters once per day for each Cavalier level he has. The Cavalier has a 20 percent resistance to fire and acid damage.
The only disadvantage a Cavalier has is he cannot equip and use missile weapons. In practice, this disadvantage has no impact. Even without the restriction against it, there never is a reason to use missile weapons as a Paladin, regardless of class kit. Because of the high requirements for other attributes, a Paladin is not going to have a high enough dexterity to reliably hit an enemy with missile weapons. In addition, the heavy armor, Paladin-specific swords, buffing spells and resistances that Paladins gain serve little to no purpose when using a missile weapon.
The "Baldur's Gate" series are based on the rules of "Advanced Dungeons & Dragons" but are not identical. Multiclassing is a game mechanic that allows a character to have two or more classes. This grants a wider skill set to the character but causes him to progress much more slowly. One of the differences between the two is that Paladins in "Baldur's Gate" cannot multiclass. It does not matter if it is a normal Paladin or one using a character kit.
A Cavalier and any other Paladin variant changes to the "Fallen Paladin" class if it ever has an alignment other than lawful good. He completely loses all Paladin and Cavalier abilities permanently. Any further levels gained are identical to gaining a level in the Fighter class. There is no way to become a Paladin again after this occurs. Even returning to the lawful good alignment does not undo this change.