Oh dear, what a ridiculous thing for the doctor to have said!
Whilst it might have been said as a slightly comforting comment to be kind to your mum, it is incorrect.
My mum had a diagnosis of dementia, but also a great deal of insight into her problems. Her diagnosis was Lewy body dementia, which does tend towards fluctuating abilities and often insight - but not always. There are no hard and fast, black and white answers or criteria with dementia.
Could you perhaps keep a daily diary of problems, which you could then use as "evidence" for another appointment? And maybe another GP in the practice who might be more helpful?
It is so frustrating to have been brave enough to raise these concerns, only to have them dismissed. You, and your mum, know best what is wrong and what has changed. And whilst there are no magic cures or medications to put things right, for some people the medication can slow down the progress of dementia, and getting into the system is necessary to progress help that might be available.
The doctor should also carry out other tests to check Vitamin B levels, and the thyroid etc, as these can lead to problems if out of kilter which can be treated.
I am sorry that someone who should know better should be so useless!