Recent studies on atomically thin lateral heterostructures have demonstrated the formation of complex interfaces that can be exploited for tailoring the properties of 2D semiconductor systems for optoelectronic applications. In order to understand the compositional disorder and the resulting optical and electronic properties at these interfaces, tip-enhanced Raman scattering (TERS) imaging and spectroscopy have been used to characterize 2D lateral heterostructures at different sites across the interface, showing a continuous evolution of the Raman-active modes when transitioning from one pristine material to the other. Here, we use density functional theory (DFT) for calculating the evolution of vibrational modes, nonresonant Raman spectra, optical absorption, and electronic structure of 1L-MoS2, WS2, and MoxW1–xS2 alloys. The calculations reproduce the evolution of the Raman modes observed in the TERS measurements, explicitly confirm the extended alloyed nature of the heterostructure interface, and provide a direct mapping of the TERS spectra to local nanoscale alloy compositions. We further elucidate how S vacancies activate a defect mode in these systems and how the mode evolves with composition, providing a second direct comparison to the nonresonant TERS measurements. Leveraging the explicit determination of the composition, we calculate how the realistic interfacial composition affects the band alignment between the two 2D materials. Our study serves as a roadmap for how the same computational approach can predict the compositional-dependent properties of additional lateral heterostructures, providing a valuable resource for quantitatively interpreting state-of-the-art nanoscale characterization measurements such as TERS imaging and spectroscopy.