Lucia Marco diligentior est, sed alia discipula eo timidior.

Because Marco is in the ablative singular. With a comparative adjective such as diligentior (more diligent), Latin often uses the ablative of comparison instead of quam.

So:

• Lucia Marco diligentior est
  = Lucia is more diligent than Marcus

Here Marco means than Marcus, not to/for Marcus.

If Latin used quam instead, it would be:

• Lucia diligentior quam Marcus est

Both are normal.

Latin has two common ways to express than with comparatives:

1. comparative + quam

   • Lucia diligentior quam Marcus est

2. comparative + ablative of comparison

   • Lucia Marco diligentior est

This sentence uses the second pattern. English usually needs than, but Latin can leave it out because the ablative already shows the comparison.

Eo is the ablative singular masculine/neuter form of the pronoun is, ea, id (he, she, it / that).

In this sentence, eo refers back to Marco and is also an ablative of comparison:

• alia discipula eo timidior = another female student [is] more timid than him

So eo here means than him, not something like to him.

Because they are comparative adjectives.

Latin usually forms the comparative by adding -ior for masculine/feminine and -ius for neuter:

• diligens → diligentior = more diligent
• timidus → timidior = more timid

So -ior is the normal comparative ending you often see in the nominative singular masculine or feminine.

Because comparative adjectives belong to the third declension, and in the nominative singular the masculine and feminine use the same form: -ior.

So:

• masculine: diligentior
• feminine: diligentior
• neuter: diligentius

That means diligentior can agree with Lucia, and timidior can agree with discipula, even though they do not look especially feminine.

Latin often omits a form of sum (to be) when it is easy to understand from the context.

So:

• Lucia Marco diligentior est, sed alia discipula eo timidior

really means:

• Lucia Marco diligentior est, sed alia discipula eo timidior est

English sometimes does this too in certain styles, but Latin does it much more freely.

Alia discipula means another female student or a different female student.

• alia = another / other
• discipula = female student

They agree with each other in gender, number, and case:

• feminine
• singular
• nominative

So alia is describing discipula.

Both can sometimes be translated as another, but they are not exactly the same.

• alia often means another / a different one
• altera often means the other one of two

So alia discipula suggests some other student or a different student, without strongly implying that there are only two students in question.

The key clue is the comparative adjective:

• diligentior
• timidior

After a comparative, an ablative noun or pronoun is very often an ablative of comparison. So when you see:

• Marco diligentior
• eo timidior

you should think:

• more diligent than Marcus
• more timid than him

If these were indirect objects, the sentence structure and meaning would not make good sense here.

Latin word order is much more flexible than English word order. This sentence is perfectly normal Latin.

A few things to notice:

• Lucia comes first, so she is the topic of the first clause.
• Marco is placed right next to diligentior, which helps show the comparison.
• sed clearly divides the two clauses.
• In the second clause, eo is close to timidior for the same reason.

A more English-like order is not required in Latin. The endings do most of the grammatical work.

Yes. A perfectly good alternative would be:

• Lucia diligentior quam Marcus est, sed alia discipula timidior quam is est

Or more naturally in Latin, with a repeated name or a clearer pronoun.

But the original sentence is more compact because it uses the ablative of comparison:

• Marco
• eo

Latin often prefers this shorter construction.