Unfortunately, kids WILL be kids. And if not this, then something else. Biting, hitting, improper behavior and speech, you name it- the sky is the limit. Children see and hear so many innapropriate things in movies- even children's movies, but even so much more on television and from others. Your job as a parent is to spend the rest of the next 15 years trying to filter as many of these things for your kids as you can.
At 3 years old, your daughter's play with any others should be supervised - AT ALL TIMES anyways.
Do not allow them to play outside your view. Do not allow your sister to take your child with them for the day when you're not there also. Tell both children that it is innapropriate for them to go to the bathroom together, and they should not do it again. Sounds like personal boundries need to be explained to both children. The six year old should have no problem understanding what he is told regarding them.
You can certainly give you sister the facts about what you saw under the table - but just the facts. You could also say they were in the bathroom together and you went ahead and told them it was innapropriate. and leave it at that. Then be vigilent about watching them play. Hopefully your sister will follow up with her boy when she is at home.
If anything like this happens again in the future- you will have already laid out the history and then can approach it as a problem that needs to be addressed.