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The AirTag connects to Apple's Find My app on iPhone 11 and 12 series, which shows the tracker's last known location on a map. If it's in Bluetooth range you can ring it using the phone or Siri.
If the AirTag isn't nearby it can be tracked using a combination of its built-in U1 chip and Ultra Wideband technology. Apple calls this Precision Finding and it uses input from the camera, ARKit, accelerometer and gyroscope. You're guided to the tag by a combination of sound, haptics and visual feedback.
Additionally you can set the AirTag as lost and if it comes into range of another iPhone with the Find My app (in a country which supports the Find My network and doesn't restrict Ultra Wideband), it will be notified with your contact information. Like Samsung's Galaxy SmartTag+, the AirTag can anonymously and securely use other phones to update its location.