TIL what "distinguish" actually means. This is a poorly worded feature on Lemmy's end IMO.
For other people who are also confused:
Distinguish was meant to mean "speak as moderator", not "sticky this comment to the top". What you're talking about is something different, like pin or sticky , and would need to be added separately.
source: https://github.com/LemmyNet/lemmy/issues/4216
Now that that's cleared up for me, I still do not like naming it "Distinguish" since it's confusing. I think I would rather name it something like "Mark comment as important" or even "Highlight comment".
Giving it some thought I like "Highlight comment".
Update
It looks like on the latest version of Lemmy it's not called "distinguish" in the UI any more. It's called "Speak as moderator". I can update the name to that.