This question generally pertains to the legal context in the US. Reviewing this page I gather that capitalization is used to refer to a specific instance of an item whereas capitalize is not used when referring to the general concept. For example, "a judge typically sympathizes with the defendant in court" in contrast to "the Judge refused to listen to what the Defendant argued, against traditions of that Court".

Is this a good way to think of it? Is such a capitalization distinction only used in the legal world?

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Yes, this is a good way to think about it. The capitalised version of such a noun in a legal document refers to the particular instance of the general concept (that the noun is for when not capitalised) that is involved in the case that the document is about. When capitalised in a document submitted to a court, Court thus stands for the court that is being addressed, Defendant stands for the defendant in that case, and so forth. The best way to make sense of this practice is to regard the capitalised nouns as proper names, within the context of that particular document. Consistently with the idea that these words function as proper names, lawyers sometimes dispense with the definite article in front of them.

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