Ellipsis is when a part of a word or sentence is omitted because the listener (or reader) understands it is there. (e.g. 'If you want us to come here tomorrow, we will' has the end of the sentence [come here tomorrow.] elided, because everything after 'will' is obvious.)
However, here you are looking at a different grammar point. Adjectives describe nouns and pronouns. Adverbs describe verbs and adjectives. So we are not looking at part of an adverb losing the 'ly' part, but the substitution of an adverb for an adjective.
Your example shows this distinction well. Because the adjective 'distinct' is used, we know that the sentence is both distinct, and also grammatically correct. That is, 'distinct' describes the noun 'sentence'.
'Grammatically' is an adverb, so we know it describes the adjective 'correct'. If we also made 'distinct' into an adverb, we would also make it describe 'correct, so the sentence would be distinctly correct, and also grammatically correct. But it may no longer be a distinct sentence, no matter how distinct its correctness is.