The jester's costume that Fortunato is wearing helps the reader to visualize this man. The cap with jingling bells attract attention to him. Ordinarily this might be considered a problem for Montresor, who does not want people to remember that they saw him with Fortunato when it is discovered that Fortunato is missing. But Poe understood that the more attention Fortunato attracted, the less attention would be paid to his companion Montresor, who was dressed in black and wearing a black cape. Although the Montresor family must have lived in Venice for some time, Montresor, whose name is obviously French, apparently does not consider himself Italian. He shows this early in the story in the way he seems to distance himself from Italians:
Few Italians have the true virtuoso spirit. For the most part their enthusiasm is adopted to suit the time and opportunity....In painting and gemmary, Fortunato, like his countrymen, was a quack...
Montresor is not wearing a costume and is not participating in any way in the carnival. He is practically invisible among all the colorfully dressed throngs of Venetians. He must seem like a shadow beside the flamboyant and raucous Fortunato. When inquiries about Fortunato are made, there will be many people who remember seeing him. But no one will remember seeing whether there was anyone with him.
Poe may have also intended Fortunato's costume to characterize him as a fool, but I believe Poe's main purpose was to make him so conspicuous that he made Montresor seem like a shadow.
The story takes place, according to our unreliable narrator, during the "extreme madness of the carnival season," when people wore costumes and disguises and there was a licensed misrule that dominated society. What is so clever about Poe's choice for Fortunato's costume is that is foreshadows how he is going to be deceived and taken in, and how cunning Montresor's manipulation of him is. Note how he is described when he is encounted by Montresor on that fateful evening, that is to be his last:
The man wore motley. He had on a tight-fitting parti-striped dress, and his head was surmounted by the conical cap and bells. I was so pleased to see him that I thought I should never have done wringing his hand.
Fortunato is dressed as a fool, which is emphasised by the jester's "conical cap and bells." What is so ironic about this costume is that Fortunato's costume is truer to his character than he thinks, as he indeed shows himself to be the archetypal fool in the way that he trusts Montresor so quickly and yields to his suggestion to go and taste the Amontillado. He is seduced by his own arrogance and belief in his superiority when it comes to wine tasting, and this, unknowingly, allows Montresor to get the better of him. His dress as a fool is therefore completely suitable, as a fool he shows himself to be.