Possessing the ability to connect mentally is rather common, and can be developed. As somebody suggested, it often requires practice and exercise.
What it sounds like happened is that she let her imagination get the better of her, and started discussing "messages" that were not actually received or sent.
However, I am also curious what a water fairy is? Your sister is human. So are you. Witchcraft is either a religion or a system of magic, depending on the view. Fairies are spirits, most commonly associated with nature. A human is a human.