Cloak and Dagger is (supposedly; see below) a kids movie — it’s kind of a crossover into fantasy.
Henry Thomas (yes, the kid from E.T.) plays Davey, a kid who loves role-playing games, especially those starring his hero, Jack Flack. He also has a vidid fantasy life, imagining Jack in real-life. Jack is played by Dabney Coleman, who also plays Davey’s widower Dad.
Davey accidentally witnesses a real-life murder, the victim of which hands him a video game cartridge and a mysterious number. Now Davey is running from actual spies, but no one will believe him, except the fantasy version of Jack, who appears and coaches him through life-or-death situations.
This was released to theaters at the same time as The Last Starfighter. They apparently played in a double-feature. A prominent plot point of the movie is a video game called Cloak and Dagger. It was an arcade title at the time, but in the movie it appears to run on the Atari 5200.
For a kids’ movie, there’s a lot of wanton killing. And it’s not even implied — lots of people just straight-up get shot on-screen. Also, there’s a disturbing monologue by the main villain explaining to Davey all the different ways he’s going to shoot him to watch him die slowly.
I was kind of fuzzy on the “rules” of the magic. Jack is in Davey’s imagination… except for one time, when he’s not. And Davey’s Dad escapes from a certain-death situation, which makes me wonder if he was Jack all along?
Maybe I’m reading too much into this. But, again, the tone of the movie and the violence in it really seemed to be at odds. Still, it was a cute premise, and the opening scene with Jack on a mission is a laugh riot of spy cliches which ends with a pair of giant D12 dice rolling towards him.