This sequence through Mama's narration gives us a glimpse of how Dee's personality was formed and how this influenced what she became as an adult. She was very different from Mama and Maggie and always seemed to be an "outsider" in many ways. She despised everything about the way she was raised. One part of the story describes how she stood staring at the house burning down intently. This obviously raises the question of whether or not she actually set the fire that destroyed the house. We do not know if this is the case, but it is definitely a possibility based on what we, the reader, know about Dee.
Another sequence that is important is the dream sequence in which Mama imagines she is on a talk show similar to "This is Your Life." Dee appears and everything is magically wonderful between Mama and Dee. Mama realizes this is only her wishful thinking, but it is still an important look into Mama's wish to be closer to her daughter.