Had a conversation with a psychiatrist about this recently. The correlation is not between Benadryl exactly, but a class of drugs called anticholinergics of which Benadryl is one. Specifically, there is only a causal link between specific types of anticholinergic drugs (antidepressants, antipsychotics, antiparkinson, bladder antimuscarinic drugs) and not all anticholinergics - Benadryl doesn't fall into any of the categories I just mentioned. Specifically, the largest study (in terms of sample size) showed that there only a slight increase in your odds of getting dementia (6% higher odds) for people older than 55 after taking < 1095 total daily standard doses for over three years (for Benadryl, that's 25-50 mg daily)[1]. That's already a reasonably high dose.

This and other studies have not found correlations between antihistamine anticholinergics and dementia.

[1]: https://jamanetwork.com/journals/jamainternalmedicine/fullar...