So I figured it out by now. It didn't really work with overlay but using the main .dtsi file worked.
pca9635.dtsi
&i2c {
    pca9635@8 {
        compatible = "nxp,pca9635";
        reg = <0x08>;
        #address-cells = <1>;
        #size-cells = <0>;
        status = "okay";
        led@0 {
            label = "led0";
            reg = <0>;
            default-state = "off";
        };
        led@1 {
            label = "led1";
            reg = <1>;
            default-state = "off";
        };
        led@2 {
            label = "led2";
            reg = <2>;
            default-state = "off";
        };
        led@3 {
            label = "led3";
            reg = <3>;
            default-state = "off";
        };
        led@4 {
            label = "led4";
            reg = <4>;
            default-state = "off";
        };
        led@5 {
            label = "led5";
            reg = <5>;
            default-state = "off";
        };
        led@6 {
            label = "led6";
            reg = <6>;
            default-state = "off";
        };
        led@7 {
            label = "led7";
            reg = <7>;
            default-state = "off";
        };
        led@8 {
            label = "led8";
            reg = <8>;
            default-state = "off";
        };
        led@9 {
            label = "led9";
            reg = <9>;
            default-state = "off";
        };
        led@10 {
            label = "led10";
            reg = <10>;
            default-state = "off";
        };
        led@11 {
            label = "led11";
            reg = <11>;
            default-state = "off";
        };
        led@12 {
            label = "led12";
            reg = <12>;
            default-state = "off";
        };
        led@13 {
            label = "led13";
            reg = <13>;
            default-state = "off";
        };
        led@14 {
            label = "led14";
            reg = <14>;
            default-state = "off";
        };
        led@15 {
            label = "led15";
            reg = <15>;
            default-state = "off";
        };
    };
};
placed in the build folder
/home/thomas/openwrt-wallcontroller/target/linux/ramips/dts
and lastly adding an include to the omega .dtsi
mt7628an_onion_omega2.dtsi
#include "mt7628an.dtsi"
#include "pca9635.dtsi"
#include <dt-bindings/gpio/gpio.h>
#include <dt-bindings/input/input.h>
 
 



