Entitlement Cap is the maximum value of what an employee can apply for annually in eBenefit.
Benefit Type Cap is the maximum amount of what an employee can apply for a specific benefit type in a year.
To set an entitlement cap, go to eBenefit > Setup > Setup Entitlement Policy.
To set a benefit type cap, go to eBenefit > Setup > Benefit Type. There you can set a cap per year and per claim.