After way too much time searching, I figured it out finally.
HRB explains it fairly well (though there is an error in their example). Basically, the $5k supplemental disability credit for the caregiver of DTC eligible persons under 18yrs have to factor in the daycare expenses. You are allowed to have up to $3,373 in childcare without it impacting the benefit. Anything over this amount is deducted from the $5k. This is why your benefit is going down when you add it.
It is independent from the non-disability claiming of childcare and therefore reportable in both places.
I am not a tax expert, just expert googler.
Disability tax credit (DTC)
