Oh God. Where to begin.
Lain explored a lot of existential bullshit in the series. It proposed that the only thing that made you YOU was the uniqueness of your body and how it grounded you to the Earth. Without a body you would quickly lose whatever personality you shaped because data is easily copied, spread and misinterpreted. "God" manipulated all the data in the area and converted it into the Wired, including her sister. She experienced harsh data manipulation. God then made a clone of her in order to spy on Lain, the sister saw the clone, could no longer prove that she was herself, and promptly dissolved into useless data.
tl;dr: MY OWN CLONE!