ability / capacity
A skill someone has now versus potential or the most something can hold.
Ability is a present skill or power to do something: the ability to speak three languages. Capacity is either the potential to do or become something (the capacity to learn, the capacity to lead) or the most that a space or container can hold or a system can produce (a seating capacity of four hundred, the plant’s output capacity). For a skill someone already has and uses, use ability. Capacity is not a more formal synonym for it.
Examples
UseHer ability to back a fifty-three-foot trailer into a tight dock impressed the yard crew. (a skill she has now)
UseThe hall has a capacity of four hundred. (the most it holds)
AvoidAfter ten years on the desk, he has the capacity to edit a manuscript in a weekend. (a proven skill: ability)
Capacity also means a role (in his capacity as trustee) and, in law, the competence to make a binding act (the capacity to contract). Ability has neither sense.