It's true that Real Madrid is already 8 points ahead at the moment, but they can't be too dismissive and think they will easily win the La Liga title because there are still 10 matches left in this season which makes anything possible and even Real Madrid still has several difficult matches left. including against their rivals Barcelona.
Real Madrid will definitely be distracted by the UCL match against Manchester City, but I am quite sure that a team as big as Real Madrid will be able to prioritize both equally without leaving anyone out because both are very important to them.
It's good that you stated in your conclusion that Real Madrid is a team capable of winning both competitions. They may face challenges ahead, but I am confident they will overcome them and emerge victorious by the end of the season. If I were them, I would prioritise Manchester City's game right now over my next La Liga fixture because it is more important than the La Liga, where they are already leading the second-place team by eight points.
Real Madrid should concentrate more on the Champions League match against Manchester City while fighting for the best result because it is the game that will determine how far they can go in the Champions League competition, as their La Liga fight appears to be becoming more realistic given how far they've come in the league this season.