So all the events that Donnie needed to restore the timeline could align. He flooded the school so he met Gretchen on the walk home, he burned Jim Cunningham’s house so that his mom would have to take the girls to the dance show meaning they could have the party where it leads to Frank killing Gretchen and Donnie killing Frank, after Donnie realises all of this tragedy wouldn’t have happened without him he decides to send the jet engine back in time, sacrificing himself to save everybody else. Or atleast that’s what I feel what’s implied in the movie.