Why does my cat do this?

This is how she knows to play. As a kitten, if she was properly taken care of the litter and her mother would have told her that this play was too rough. Since she is in a unique situation (THANK YOU for rescuing her btw, its obvious you love her very much!!) its up to you to be her litter mate and teach her the right way to play. She doesn't mean to hurt you, she just doesn't know any better, so correcting her isn't going to have an effect. When she bites you like that, yelp or yowl or hiss like a kitten would, and stop playing with her immediately and walk away. This will tell her, in her own language, that what she is doing is unacceptable. After a little bit or waiting, play with her in an acceptable way (wand, laser pointer, throw some mice around) and praise her a lot when she plays nice. She will eventually get the picture :) Best of luck to you guys!!