The WLC does not pass multicast (nor broadcast) traffic by default. It can be enabled with two basic modes: Unicast and "Multicast". With Unicast mode, multicast packets are encapsulated in unicast CAPWAP packets to every AP that has the SSID(s) associated with the client VLAN that received the multicast from the wired network. Multicast mode of multicast (tongue-twister) requires that the Management subnet and APs subnet(s) are running multicast routing (if different subnets), with the APs joining the WLCs Multicast group. Then, client multicast packets are encapsulated in CAPWAP multicast packets to each AP that has joined the multicast group.
There is much more to this, but that's a start.
http://www.cisco.com/en/US/docs/wireless/controller/7.0/configuration/guide/c70ccfg.html#wp1088037 for the base multicast component. http://www.cisco.com/en/US/docs/wireless/controller/7.0/configuration/guide/c70cms.html for VideoStream, which converts multicast to unicast over the air (very cool!)
As it relates to multicast, if my WLC's were at Site 1 and my clients were at Site 2, and an application on Site 2 sends a multicast, would those packets go back the WLC's at Site 1 first, then come back to Site 2?
If you are using local mode APs, then yes, because all traffic would be tunneled back to the WLC from the AP. Also, keep in mind that multicast routing would need to be set up properly between Site 1 and Site 2 no matter which mode of multicast you are using from the controller to the AP, so that the stream can get to the WLC.
Which is configured because I use multicast on the wired LAN currently. I was just wondering what the benefits of using multicast on the wireless LAN if the traffic had to make a double trip. Is there a way to use HREAP to tell the multicast traffic to stay local?
You can certainly use H-REAP with local switching for those SSIDs. The clients will send IGMP messages through the AP to the connected switch. The WLC doesn't get involved at that point.
The only issue could be if you want to run VideoStream, which doesn't support H-REAP.