[non-romantic] My [35f] sister [39f] expected me to share my bed with my 7yo nephew while babysitting him.

On Saturday I babysat my 7yo nephew overnight for the first time so my 39yo sister and her husband could celebrate their anniversary. When it came time to go to bed, he ran into my bedroom and got into my bed. It was cute but I let him know I made him his own bed in the guest room.
He got really upset and said he doesn't sleep alone. I love my nephew but I share a bed with my husband and there's no way he was going to be sleeping with us, it's just not something I'm comfortable with.
Unfortunately this turned into a full on meltdown. My nephew is usually a very happy easy going kid so I was really shocked by this. I called my sister and let her know what was going on and she said to just let him sleep next to me. She suggested my husband could go to the guest room if he's uncomfortable.
I told her I wasn't okay with that and she revealed my nephew has never slept alone - literally not one night in his entire life. He's never been watched by anyone outside the family and this was his first sleepover without his mom so I assume she's serious when she says not one night.
This is completely new info to me. I'm honestly shocked, he's seven years old and he has his own bedroom that is apparently just for show. My sister has very "crunchy" ideas about parenting but this seems extreme even for hippy type parents. Once I made it clear he would have to sleep in his own bed or go home she got really upset with me and came to pick him up.
I feel like she should've warned me about this beforehand, not just assumed I'd be fine with sharing my bed. I love my nephew but I don't have kids and even if I did they would have been sleeping by themselves for years by the time they turned 7, just like I was at that age. I'm not heartless, I get that kids can have nightmares and need comfort especially in new places, but sharing a bed every single night at this age is just weird to me.
My sister is making me feel like I'm the bad guy here, like I'm making her seem like a weirdo and I should be more compassionate. Is this more common than I think it is? Does anyone have experience with this kind of thing and advice on how I should approach this discussion with my sister?
TL;DR: My sister expected me to share a bed with my 7yo nephew who has never slept alone when I babysit him over the weekend. I refused and she got upset and claimed I ruined her anniversary.


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