Well my DD14 is a drama queen & it is a damn difficult behaviour to deal with. Fiona the way your DSD dealt with this is so mature & loving. Good on her - she did just what was needed.

My daughter lives in constant chaos and constant drama. She has ASD which doesn't help with the chaotic side - & I suspect she creates drama as a way to feel like she fits in. She struggles desperately with being liked and likeable.

I try (and fail miserably at times) to not be pulled into her dramas. She is always late, disorganised, someone is looking at her the wrong way, spoke to her the wrong way, is jealous of her...

I use language like: "so you see it as Amy is criticising your jeans because she stared at you"? "Could it be that she was day dreaming & you were in her gaze?" "Could it be that she liked your jeans & was wondering what brand they were?"... etc etc
It is exhausting & I get absolutely spent from the behaviour. So my empathy goes to this childs Mama Fiona... It's hellish..

The key is to remain calm & unmoved by her dramatic behaviour... That is hard but the more reaction she gets the more she will act out... (in my experience at least)

It is hard because I literally take little notice of most of what DD says...

She can't set the table without dramatically tripping, falling, spilling etc etc. I don't react to anything bar behaviour that I want to enforce.