Nicole fell into a terrible madness after Topsy’s birth, though there is no indication that the same thing happened when Lanier was born. It’s safe to imagine that Nicole was afraid for her, afraid for what can happen to a little girl in this world. It’s quite possible that the idea that Topsy could be hurt in the same way she was, and doubts over her ability to protect her daughter, provoked the madness.
Luckily, in the reality of the novel, Dick does not rape his daughter. But, he does become more and more like the Devereux Warren, at least in Nicole’s eyes. (See his "Character Analysis" for a longer discussion.) This goes a long way toward understanding why Nicole tries to drive the whole family off a cliff. Maybe she felt that things were so messed up that the only way to save her daughter from repeating her own history was to kill her.
Topsy can be seen as the silent (she shares a song with her brother, but gets no actual lines in the book) catalyst to the novel's big climaxes. Topsy Diver represents the possibility that history will repeat itself in cruel ways. Can you think of any other examples of this possibility in the novel? Can we even connect this to World War I, which, before World War II, was believed to be "the war to end all wars"?