I don't know if I should tell my Mom with dementia that she has been invited to her SIL 90th birthday party?

If she hasn't seen them in quite some time and likely won't remember the event or will fret over it; then it is perfectly okay to not tell her. Your response to other family members should be "Mom and I send our best wishes but unfortunately we can't attend due to mom's health and current dementia". If they inquire further, you can offer that you "would love to bring her but that big event outings now are just too much for her and she suffers after so you have made the compassionate decision to skip the event". Send a nice card and don't look back.

Mom won't know the difference, won't ask or question why she wasn't told, etc. If it ever comes up; just redirect her.

Sometimes its okay to selectively provide information especially if it makes the dementia person agitated, fretful, etc. Its just not worth it in my book.

Also suggest that they come to visit her one or two at a time!

I took your advice and called my cousin and told her I didn't think Mom would be up for a party...She is a retired RN Manager of a NH, so she should totally understand.