@jackhen said:
is there a certain order they have to be in? Id like to keep all things I dont want affected on the default light layer if possible.
Ah, sorry I pointed you to the incorrect setting. The Light2D layer should be set in the Item Cull Mask in Range-tab

The mode:mask functionality is still a bit unstable if I've understood correctly so this might just be a problem of Godot itself also. As soon as you have more than one Light2D with mode:mask, you may run into problems.
To have truly reliable masking like this, it might be better to:
- Render your sprites in a Viewport
- Use the Viewport as a ViewportTexture on a Sprite to display the result
- Mask that Sprite with a shader