The last thing on earth you tell a small child is they need to live in reality with you

Especially when it's a six year old who thinks she's responsible for her parents dying in a car crash during a storm which is why she's so adamant about feeding a fish she believes controls the weather.

Lilo is all kinds of messed up, but then she's six so her perceptions of reality aren't going to be great even from a normal baseline, let alone one involving the trauma caused by losing both parents and thinking it's your fault.