DDP with VAT number is for business customers where goods are imported and sold by sellers local business entity
My recollection is that DDP (which I think was only with DHL) was for duty pre-paid. That is, the buyer paid everything during ordering and wouldn't be troubled by demands for extra duty and/or tax. Not selecting that option meant that duty was paid on import (if they noticed, and/or it was over some small figure), so the buyer might have to cough up more on delivery.
However, that's changed now with Brexit and the EU deciding there is no escape from VAT anymore. Instead, at least for us in the UK, anything below about £130 is tax paid at the time of ordering, and anything over is tax paid on import. So nowadays DDP is a redundant option (and I'm pretty sure I no longer saw it as an option during ordering).
Of course, YMMV and our beloved overlords could change it all tomorrow. Again.
DDP by itself means you have no hassle with customs. Seller does everything for you on their side, as if you were ordering locally. When goods are sold to business with buyer's VAT number required, goods are sold by local entity (in case of EU, any EU country). If goods are sold by entity located in other EU country, business does not need to pay VAT at purchasing. If it's in the same EU country, then VAT is needed to be paid, however it can be claimed back. Say when I order parts from Mouser I buy from French PMDE MOUSER ELECTRONICS INC. Or in case of Digikey, I buy from German company Digi-Key Electronics Germany Gmbh, even though parts are shipped from US. If Digikey customer is located in Germany they would need to pay VAT, as I'm located in Latvia, I don't pay VAT. Type of DDP offered by LCSC does not involve their local entity, thus business customers need to pay VAT the same way as individuals, but there is no way to claim VAT back since they paid it to foreign entity. Therefore DDP offered by LCSC is not good for business customers. Does not matter for individuals. In case of UK, DDP with buyer's VAT number can be only done if seller has UK business entity (since it's out of EU) and thus VAT is paid when purchase is made but it can be claimed back from HMRC.
However, that's changed now with Brexit and the EU deciding there is no escape from VAT anymore
For business it does not matter if they pay VAT or not. They claim VAT back after paying it. And there was no "escape from VAT" nor before, nor after Brexit. You pay VAT to LCSC, then they pay it during import instead of you. It's as if you have heard "DDP" abbreviature but have a complete mishmash in understanding of how it works.
So nowadays DDP is a redundant option (and I'm pretty sure I no longer saw it as an option during ordering).
DDP means you do not deal with customs and do not need to pay any clearance fees, not a way how to avoid VAT

(unless you fraudulently use VAT number which does not belong to you). Sale is final with no upcoming fees. Nor it's something offered by DHL only. It's offered by DHL, UPS, FEDEX and many others. Seller is free to chose whichever they want.