That sounds like one of the monster supernatural abilities. Many of them function like spells, have names like them, but only appear on NPC/Monster templates when editing them in the toolset. For example, the circle of fear around a mummy or a dragon operates somewhat differently when activated than regular spells. They can't be interrupted by attacks, don't have complex casting GFX and typically are quick to use. Basilisk gaze, bodak stare, manticore spines, etc... many of those are done via these specific supernatural abilities. They can be assigned to items however, hence your drop item and others like the bracers of the manticore, or the enchanted dragon stones that cast dragon breath when used.
The supernatural abilities granted by subrace skins like Deep Dwarf invisibility, Brownie Confusion and Tiefling/Dark Elf Darkness work on the same supernatural ability method I believe. Notice that they "point" and cast these very quickly without chance of concentration or armor failure, as opposed to a bard, sorcerer or wizard physically waving their arms and casting the spells out. Supernatural abilities created by a subrace or monster are reflexive and natural rather than learned, and their power is typically linked to their total character/CR level rather than bonafide caster levels.