Short Answer
No federal court in the U.S. would do what this particular ruling did without express statutory authorization to do so. But that does not mean that this ruling is outside the realm of what it can be proper for a judicial branch to do.
U.S. courts make similar, somewhat arbitrary rules in other subject matter areas under their general court rule making authority. It makes more sense to see this kind of ruling in a civil law country like Indonesia than it does in the U.S. or in other common law court systems, because the highest appellate courts in civil law countries are not so deeply tied to the idea that it interprets the law solely through resolving actual individual disputed cases as the U.S. court system is as a matter of constitutional law.
Also, the Indonesian Supreme Court does not have the authority to declare that legislation is unconstitutional (a power called judicial review). Instead, this power is limited to a separate constitutional court, just as it is in most civil law countries.
Long Answer
How can a judicial branch change the law like that? Or am I missing
something? Is this still within "interpreting" the law instead of
modifying the laws? How does it work? Did the supreme court simply
give "guidance" on how to enforce the law instead of nullifying the
laws?
This is still interpreting the law.
The job of the judicial branch is to carry out the legislature's intent in adopting it.
One principle of statutory interpretation is that de minimis violations of the law are not sanctioned by the courts.
For example, most large denomination U.S. currency (e.g. $20, $50 and $100 bills) in the U.S. has trace amounts of cocaine on it. But, laws prohibiting possession of cocaine were not intended to prohibit the unintentional, unknowing possession of trace amounts of cocaine so small that they could not have any meaningful physiological effect.
Similarly, if a single hair on the skin of a person crosses a property line by 0.1 millimeters, this isn't considered trespassing in a sense that can be enforced in court.
Another principle of statutory interpretation is that appellate courts are supposed to provide guidance to lower courts regarding how they should exercise their discretion.
In civil law countries, the courts have a role that is closer to that of an administrative agency, than in common law legal systems. They are structurally more a part of the larger governmental bureaucracy than they are a completely separate body, especially in public law cases (i.e. lawsuits between private parties and the government) and in criminal law cases (i.e. lawsuits brought in the name of the government arising out of misconduct that is usually between private parties).
The law of controlled substances prohibitions, in particular, has always had a particularly administrative character to it, because the process of defining what constitutes a controlled substance requires a government agency to apply chemistry in a way that defines what substances are and are not prohibited in a sensible way.
For example, ordinary poppy plants possess trace amounts of opioids and the human body itself also creates opioid-like chemicals, but those aren't intended by the legislature to be illegal.
Even when it makes regulation styled "circular letter" ruling, the Indonesian Supreme Court is still acting in a judicial manner to carry out the legislature's intent in enforcing the criminal laws it adopted, rather than acting like a legislature which makes decisions purely based upon which factions have the most votes to support which policies.
Also, the Indonesian Supreme Court, like most courts in civil law countries, and unlike almost all U.S. Courts (federal and state), does not have the power of judicial review (i.e. the power to declare a law unconstitutional and invalidate it). But, in 2003, Indonesia did create the Constitutional Court (Mahkamah Konstitusi) which does have this power.
Is it common practice that judicial branch modify the laws without
having to show that the original law is unconstitutional or anything.
Does the judicial branch in Indonesia have power to do so?
What the Indonesian Supreme Court did in this case is more in the nature of a government regulation within a body of law (the criminal law) that is in its primary jurisdiction, which is something that the U.S. federal courts generally do not do without express statutory authorization, because U.S. federal courts (and most, but not all, state and local courts in the U.S.) are limited to deciding individual "cases or controversies".
But, since a civil law system is not wedded to the idea that legal interpretation from the courts comes entirely from precedents set in individual cases, and indeed, does not, as a general rule give decided resolutions of particular cases the force of binding precedent, it is less out of character for a civil law supreme court to make a ruling like the one linked that essentially establishes a government regulation to supplement the interpretation of its controlled substances law that applies, in general, rather than in a particular case, like other government regulations, much like a government agency might decide if a particular chemical formula does or does not qualify as a controlled substance.
U.S. courts have similar regulatory authority, but mostly in procedural matters, for example, in setting deadlines for parties to take actions in the court process. For example, the U.S. courts routine set an arbitrary number of days after a case is decided, to file an appeal.
Similarly, in U.S. law, the substantive law states that indigents are entitled to a waiver of court filing fees and to representation by a public defender, but almost all U.S. court systems operationalize that legal requirement by passing a court rule that is basically a regulation, stating that the cutoff for being an indigent is $X per year of income defined in a particular way.
In the U.S. "sentencing guidelines" at the federal level are decided by the U.S. Sentencing Commission created by Congress, but in some state courts, sentencing guidelines are established by the courts as a form of court rule. The action of the Indonesian Supreme Court here can be viewed as a court rule establishing a sentencing guideline for lower courts, which isn't quite a pure interpretation of the law, but is within the scope of the judicial branch's job of figuring out how to adjudicate whether people have violated the law and what the consequences of a violation of the law would be.
During the COVID-19 pandemic, many U.S. courts have issued regulation styled decrees governing how to address common issues related to the pandemic, such as how to reconcile the right to a speedy trial for criminal defendants, and the inability of the courts to hold in person trials due to the pandemic.
Of course, in the case of a national supreme court, like the supreme court of Indonesia, another factor comes into play. This is that there is no one in a position to overrule the decision except the legislature or the constitutional court. If the legislature doesn't change the Indonesian Supreme Court's interpretation (and the constitutional court doesn't overrule it), this interpretation has the force of law, because a majority of the judges on the Indonesian Supreme Court said so, even if there is a theoretical argument that is shouldn't have made a ruling like the one that it did.
If the Constitutional Court (Mahkamah Konstitusi) did determine that the Indonesian Supreme Court overstepped its bounds, it is likely that the Indonesian legislature would either formally give the Indonesian Supreme Court the authority to do what it did, or would adopt a law restating what its invalidated regulatory ruling did.
The Indonesian Supreme Court has a strong incentive to issue rulings in a broad regulatory style because it receives far more new cases each year than it has the resources to rule on, and has historically had difficulty getting lower courts to honor its rulings, so efficiently resolving many cases at once in a clear manner is something it is under strong institutional pressure to do.