Sister might appear thus to people (7)

I believe the answer is:

inhabit

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'to people' is the definition.
(people can mean to populate or inhabit)

I don't understand the rest of the clue.

(Other definitions for inhabit that I've seen before include "Live in (a place)" , "people" , "Live in, occupy" , "Occupy (dwelling)" , "Occupy - settle" .)

I've seen this clue in The Times.

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