According to the Wood Database, cedar chests are naturally long-lasting, able to repel moths and other insects that might damage clothes and keep clothes smelling great. This is all due to cedar's particular properties and essential oils.
The Washington Toxics Coalition, when discussing non-toxic methods of preventing moth larvae from damaging clothing, suggests using cedar chests for storing wool items. Surprisingly, this isn't due to the alleged insecticide properties of cedar oil but instead because it is so readily crafted into a chest which can maintain a tight enough seal when closed to keep insects out. In light of this, quality construction of the chest is paramount. Cedar wood itself is resistant to damage by insects and mold and is quite water resistant. Because it is so water resistant only dry items should be stored in cedar chests, as the chest may trap in moisture and cause clothes to mildew. A final benefit to cedar wood is the pleasant scent imparted to items stored within from the cedar oils in the wood. Cedar should remain untreated, unvarnished and unpainted to maximize the release of cedar oils. If the aroma fades over time, a light sanding of the chest interior will release the oils once again.