Thank you for writing to JustAnswer.
The bonds of family complicate everything, don't they? Your sister must be an unhappy person to want to hold on to such a slight offense for so long.
I think in this case you have to detach with love. Tell her you're sorry she is still hanging on to this perceived injustice, but that it's between her and your son and you won't be discussing it again with her, ever. And keep to it. If she starts talking about your son, say "talk to him...I won't discuss this when he's not here."
While it may be tempting to tell her that if she excludes your son, she excludes you too, that will escalate the situation, and family holidays will be strained for years to come.
You might consider telling your son about the situation, and asking him to talk to her. Explain that you know it's silly, but family is important, and you want to calm her down.
She seems to feel she had a special relationship with him and deserved to be invited.
He could tell her that he and his wife didn't want to hurt anyone's feelings by inviting some and not others, so they decided to just have immediate family. "I would have invited you if I could, Aunt Hurt-feelings, but then everyone else would have been mad at us. I knew you know how special you are to me, and that you'd understand." (This has the effect of making her feel special, and lets her save face by feeling superior to others)
This is one of those situations where the choice is between being right and being happy and having peace in the family. Yes, she's acting like a petulant child. Yes, she needs to move on--but for some reason this has really stuck in her craw. It won't cost much to make her feel better, and it will be worth it in the long run for peace in the family.
Ask your son to reach out to her. If she refuses to deal with him, then refuse to discuss the situation with her without your son present.
I wish you the best in this sticky situation,