tl; dr: 'schematic capture' is the process of taking a design created on another medium (e.g., paper) and re-creating a digital graphical version of it.
The term schematic capture is a holdover rooted in the evolution of schematic design practice and engineering culture.
How is schematic capture different from schematic design? Read on.
Schematic Design in the Pre-CAD Era
Before computer-aided design (CAD) became widespread, electronic designs were documented on hand-drawn schematics, most often drawn on a material called vellum, a tough, translucent paper that could stand up to erasing and be reproduced on a blueprint (diazo) machine.
Who drew schematics? Sometimes the design engineers (usually junior) would draw the schematics themselves, other times these would be drawn by draftspeople under the guidance of (usually more-senior) engineers, who would provide conceptual diagrams and sketches to the drafters to render as drawings.
Design in the CAD-Is-Expensive Era
With the introduction of CAD, these paper schematics were captured, or digitized, into electronic form, by operators trained to use the CAD platforms. (For several reasons, these operators tended to be draftspeople also. More about that in a bit.) The operators would re-draw the hand-drawn schematics in CAD to create the digital form.
The resulting computer-based schematics could then be used not only to replace vellum and blueprints (a monumental benefit in itself), but could also yield information for layout, simulation, assembly, and costing, much as it is the case today for modern schematic tools.
If this paper-into-CAD process sounds unwieldy, it was. It required careful attention to detail and multiple checks to ensure no errors crept in during to the the capturing process.
Why would anyone put up with such a process? Two reasons: cost, and culture.
Let's cover cost first. Early CAD software ran on large machines: initially time-share mainframes, then later minicomputers. Because schematic entry is graphical by its nature, to even use the software also required very expensive graphics terminals as well as faster connectivity to them.
Viewed another way, CAD terminals supplanted the drafting tables. It was thus a natural transition for draftspeople to move into driving software instead of pencil-on-vellum, carrying with them not just the institutional knowledge of drafting practice and standards, but also the layered management structure as a ‘service’ to engineering.
Which leads me to... culture.
Many electronic designers of the pre-CAD era (roughly until the late 1970s) were, ironically, computer-averse. They viewed CAD as an extension of drafting, seeing it a kind of 'secretarial work' (and, yes, there was sexism too.) Why, hadn't they already 'paid their dues' at the drafting table, only to have to learn to use a new tool to do something they 'have people' for?
This article offers an insight into how old-school engineers and executives felt about graphical terminals in the 1970s: https://crm.org/articles/xerox-parc-and-the-origins-of-gui
The Gift of Xerox PARC: The CAD-is-Affordable Era
This changed as schematic CAD platforms became both affordable and widely available (and, as some of the old dinosaurs retired or adapted.) Designers moved into entering and editing their own schematics themselves, quickly realizing the productivity gains of interacting with directly their design and its work products.
This sort of flow would be more correctly termed design entry, or just, design, as it is being driven directly by the engineer from the very beginning, interactively, with no 'digitizing' or 'capturing' step in between (and, no more 'CAD caves' staffed by draftspeople in the middle.)
Nevertheless the term 'schematic capture' still persists, even if only as a Cadence product name (they still use that term to mean design entry.)
But make no mistake: capture is not what actually happens for schematic design anymore. Instead it’s entry and editing, by the designer.