I'm not sure it's okay for them to ask you why you were discharged - they know it was honorable. I think it isn't legal to ask about
a disability. The instructions our HR department has given is that I can ask "Do you believe you would be able to perform all the functions of this job, with or without reasonable accommodations?" But I have to ask every applicant.
You might check with your local VA representative on laws regarding that. He may also be able to give you some tips on how to respond to the question.
If you're in remission now, you might tell them you received an honorable discharge due to a physical illness, but you're now feeling fit and well.