Named after a brimless felt cap worn in antiquity, pileus (scarf) clouds primarily occur above cumulus and cumulonimbus clouds. The video below has this excellent description that explains much:
Check out this strange circular rainbow cloud spotted in China on August 21, 2022. This is called a "scarf cloud", which occurs when a thunderstorm's updraft creates a pileus cloud and the sun's angle interacts with the ice crystals in the pileus cloud. The scarf cloud is formed by the cooling and condensation of moist air forced up and over the peak. When the sunlight is at the right angle, the light diffracts between the droplets and the ice crystals in the cloud, creating a rainbow colour.
Here's a beautiful time-lapse shot from a different angle.
