My understanding is that the "disabled" radio option just means the Gnome Tweaks program won't override anything. Caps Lock behavior will be the system default, instead of being changed by Gnome Tweaks. The other one is "Gnome Tweaks will override Caps Lock to disable it"

I would assume it is "disable this tool changing the behavior". Something like "default" would avoid the ambiguity, but maybe "disabled" works better for other settings the tool can tweak and they want to be consistent?

It might mean that the key itself is not disabled and thus free to be bound to some other action, but I agree that the remark sounds a bit odd.