Why are tattoos halal according to Sistani? Isn’t this considered altering the creation of Allah (our flesh, as this is permanent)

This is not considered altering the creation of Allah. It’s a type of ornament/decoration. Changing the creation of Allah has many meanings, and scholars have different interpretations of what it means. Some say it refers to those pagans who used to cut the ears of sacrificial animals. Sistani doesn’t consider tattoos as altering the creation of Allah.