New source found from dndbeyond.com

ddb_main/node_modules/@dndbeyond/ttui/components/Dialog/Dialog.tsx

@@ -40,6 +40,12 @@ export const Dialog: React.FC<DialogProps> = ({
   const handleClickBackdrop = (e?: MouseEvent) => {
     if (!e) return;
 
+    // Keyboard-triggered clicks (e.g. pressing Enter on a button) report
+    // clientX/clientY as 0, which falls outside the dialog rect and would
+    // incorrectly be treated as a backdrop click.
+    // https://developer.mozilla.org/en-US/docs/Web/API/UIEvent/detail
+    if (e.detail === 0) return;
+
     const rect = dialogRef.current?.getBoundingClientRect();
     const isClickInDialog =
       rect &&
@@ -49,17 +55,14 @@ export const Dialog: React.FC<DialogProps> = ({
       e.clientX <= rect.left + rect.width;
 
     if (!isClickInDialog) {
+      // Stop the click from bubbling to a parent dialog's backdrop handler,
+      // so only the innermost dialog closes when its backdrop is clicked.
+      e.stopPropagation();
       onBackdropClick?.();
       handleClose();
     }
   };
 
-  const handleEsc = (e: KeyboardEvent) => {
-    if (e.key === "Escape" && open) {
-      handleClose();
-    }
-  };
-
   useEffect(
     () => {
       // Get the element that was clicked to open the dialog
@@ -78,11 +81,27 @@ export const Dialog: React.FC<DialogProps> = ({
 
   useEffect(
     () => {
-      document.addEventListener("keydown", handleEsc);
-
-      return () => {
-        document.removeEventListener("keydown", handleEsc);
-      };
+      if (modal) {
+        // The native cancel event is only fired for modal dialogs opened via
+        // showModal(). The browser adds its own Escape key listener and ensures
+        // the cancel event only fires on the topmost modal, so stacked dialogs
+        // close one at a time.
+        const dialog = dialogRef.current;
+        const handleCancel = (e: Event) => {
+          e.preventDefault();
+          handleClose();
+        };
+        dialog?.addEventListener("cancel", handleCancel);
+        return () => dialog?.removeEventListener("cancel", handleCancel);
+      } else {
+        // Non-modal dialogs don't receive the cancel event, so we fall back to
+        // a document-level keydown listener.
+        const handleEsc = (e: KeyboardEvent) => {
+          if (e.key === "Escape" && open) handleClose();
+        };
+        document.addEventListener("keydown", handleEsc);
+        return () => document.removeEventListener("keydown", handleEsc);
+      }
     },
     //eslint-disable-next-line react-hooks/exhaustive-deps
     [modal, open],