Structurally, why does "What I Have Been Doing Lately" start repeating at paragraph 7?
Jamaica Kincaid's "What I Have Been Doing Lately" is an abstract story. It is more about imagery than it is about narrative. It is probably closer to poetry than it is to prose. It is told in a dream-like sequence, and can be interpreted as dream narrative. As such, the recurring dream simply starts over in paragraph seven, as it is about to start over when the story closes.
That said, since it is abstract, you don't necessarily want to get blocked while interpreting the story looking for logical, rational explanations. It's not that kind of story. Again, it's about images and, maybe, ideas, such as relationships between mothers and daughters.
The second narration of the dream is similar to the first. Some of the events are word for word, but others are left out, elaborated on, etc. The incident with the monkey, for instance, is elaborated the second time around. Also, she thinks she sees her mother in the first sequence, while she misses her in the second.
I'll let you go through and outline the other differences between the two sequences if you need that information.