The cap is the point at which your character's XP number stops growing. BG was designed to take characters to @80k, with TotSC installed, I think it doubles that.
You can still adventure, but the characters individual XP remains the same. There are some XP cap removers and rules set which allow your character to pass the original limit. Try
www.teambg.com for some of the add ons.
This is much more of a concern with Baldur's I and it's expansion than with II