Why?

What I understand of the movie is that Mary was mentally disturbed because of the extreme guilt she felt. She had part on her sister's death and the memory of what she did kept haunting her for the last year. When the family moved to a house numbered 13666, the movie writer wanted to show us that that house was haunted. Bad spirits or demons were living there. And those beings prey on psychologically disturbed individuals like Mary. When she thought she was seeing and talking to her deceased sister, it was a vengeful demon posing as her. It was playing tricks on her mind, inducing her to do the killings. Then that demon just abandoned her and went back to the house to haunt the mother.

While some people would prefer to think it was the actual ghost of Jennifer that takes revenge by possessing Mary's mind and body, I don't think it's much plausible. Jennifer was so much loved by her parents and grandma, she even did Mary's homework. Mary obviously loved her while at the same time was jealous for all the attention her older sister got. I don't believe Jennifer's ghost would actually come back to exercise revenge, don't see reason for that.

If the house didn't have 13666 on its address and the dolls didn't start moving by themselves in Mary's bedroom, I'd believe it could be Jennifer's ghost (or just Mary's troubled mind). Otherwise a demon posing as her fits the part better, in my honest opinion.