Concept:
To determine the differential equation satisfied by a given relation, differentiate the relation implicitly with respect to \(x\), then simplify carefully.
Given:
\[
x+y=\tan^{-1}y
\]
Step 1: Differentiate both sides with respect to \(x\).
Differentiating term-by-term:
Derivative of \(x\):
\[
1
\]
Derivative of \(y\):
\[
y'
\]
Derivative of \(\tan^{-1}y\):
\[
\frac{y'}{1+y^2}
\]
Thus,
\[
1+y'=\frac{y'}{1+y^2}
\]
Step 2: Eliminate the denominator.
Multiply throughout by \(1+y^2\):
\[
(1+y')(1+y^2)=y'
\]
Expand:
\[
1+y^2+y'+y^2y'=y'
\]
Subtract \(y'\) from both sides:
\[
1+y^2+y^2y'=0
\]
Rearranging,
\[
y^2y'+y^2+1=0
\]
Hence,
\[
\boxed{y^2y'+y^2+1=0}
\]