Open center hydraulic system. It runs in a series. Whatever is first in the series gets the priority of flow. If something upstream is being used anything downstream has to wait it's turn. If the thing upstream isn't using all the available flow the next thing downstream may work simultaneously but that is just a bonus not a guarantee.
Basically start at the pump and follow the lines and you'll see what goes where. The three point is 99.9% of the time the last thing in the series. Most of the time on these smaller tractors it goes pump to loader to any rear remote you might have to three point and then back to tank. Steering is on a separate circuit so that it's not affected. Your third function is in the series before the loader valve hence while you are using the third function the loader isn't responding.