It's tricky even for natives. The numerals два/две, три и четыре in the nominative and accusative cases are followed by a noun in the genitive singular: две сестры / два брата. The case of the adjective that modifies a noun in the nominative/accusative depends on the gender of the noun: -- if noun is masculine the adjective takes the genitive plural: два младших брата, -- if noun is feminine the adjective (usually, but not necessarily always) takes the nominative plural: две младшие сестры.

In this sentence, the subject is две сестры, so that is why the noun "сестры" is in the nominative case. According to rules, the attribute "младшие" must be in the nominative case + the plural form as well because the grammar gender of the noun "сестры" is feminine. e.g. две младшИЕ сестры, две большИЕ вазы, две красивЫЕ куклы, две добрЫЕ улыбки If a noun has masculine or neutral gender, its attribute must be in the genitive case e.g. два круглЫХ стола, два большИХ окна, два кирипичнЫХ дома while the noun is in the genitive as well.

it's a Nominative case - Subject of the sentence: две младшие сестры

Sophie, if your English is advanced (book is for English speaking students) I would recommend you to study Russian language by Y.G.Ovsiyenko "Russian for beginners"

"that две is followed by a plural genitive adjective and by a singular genitive noun." Correct, but Sg.Gen. of сестра is exacly сестры. Сестёр is pl.gen.