I'm working on the specification of ARMV6M and the instruction's T2 encoding is as below.
0 1 0 0 0 1 | 0 0 | DN | Rm | Rdn
DN is always used as a prefix for Rdn register file position and I couldn't understand why it's not just put in the Rdn.
Many of the thumb instructions, esp ones that are ALU operations have the three bit register specifications encoded in the lower 6 bits, three bits per indicating r0-r7. this specific add instruction allows for operations on low and high registers r0-r15, so the other two bits need a home they happened to put one in bit 6 that goes with 5:3 so the other went above that.
So perhaps they were thinking of saving a few gates or readability or some other reason that cant be answered here at SO. so instead of using 7:4 and 3:0 like they would in a full sized arm instruction for this one special one off instruction, they put the upper bits in 7:6 an even better question is why didn't they put the left right the same as the other two why isn't it [7,5,4,3] [6,2,1,0] instead of [6,5,4,3] and [7,2,1,0]? IMO that would have helped readability esp if you started off on the arm thumb docs that were only in print (paper) originally where H1/H2 seemed swapped.
In the pseudo code they show (DN:Rdn) and talk about a four bit number and then Rm being a 4 bit number, so that indicates what the older docs did in a different way.
I suspect they used the n at the end as lower bits and the capital N as larger bits and yes it would have read better as RdN instead of DN. or Rd3 would have been even better than that.
Instruction sets can to some extent do whatever they want, ARM is no different here the designers way back when thumb started chose what they chose. Arbitrary decision, you will be lucky to find anyone here that was in the room at the time, I have seen these things be mistakes too, in the meeting one thing is decided, the implementation by someone is backward, but by the time that gets around to the room to much investment has been made in testing, etc, to just leave it. Possible that/those engineers are already retired, or got golden parachutes a while ago, maybe you will get lucky.
Also understand that it is not uncommon that the documentation folks are often a separate department, so this could have been a game time decision (or typo) by an individual technical writer, and later determined not to change the docs down the road.
Don't read anything magical into this or some industry nomenclature, that is a bad habit to have anyway, what matters is that you understand what the bits do not how they are labelled.