So air tags are registered to your Apple ID and in the FindMY app on your phone you can see all your items on a map. Apple uses Bluetooth tech piggy backing to ping your device to update where it's at. It will show up on your app like the picture I will add. So let's say I misplace my item and it shows that it is at the Maverick gas station down the road on your app. You tell the app you want to find the device, it will then give you directions on the map to it. Once you're within bluetooth range you can ask the AirTag through the app to make noise so you can locate it with sound. You can see in my picture where my keys are compared to the other items I have. So if it was lost I would be able to know and get directions to to the keys that have my AirTag on it.
Pic 2 Here is an AirTag on my truck keys.