Given the limitations of the disguise self spell, how is this possible? Is this more like an alter self?
It's possible because the entry literally says so. The entry says:
At will: disguise self (any humanoid form)
That is a modified disguise self ability that allows the lamia to use it to appear as any humanoid form (and only a humanoid).
As the spell says, it wouldn't stand up to inspection. Anyone trying to walk behind the disguised lamia would bump into its hindquarters.
Of course, at close proximity, likely the disguise has already served its purpose of luring the victim into danger. Lamia use their disguised voice and appearance to lure victims into reach or into other dangers, so a disguise that will only work at a distance is plenty good enough for their purposes.