Help! My Air Tag has gone nuts!

It's important to understand that the Apple AirTag does NOT know it location. It relies on the Apple Find My network, which literally consists of millions of iPhones to work. Without going into a lot of details, any iPhone (not just yours) must be within Bluetooth range (~30-40') of the tag to pick up its signal. That signal broadcasts an encrypted ID. In turn, the phone would receive that ID, and along with the phone's GPS location, relay that to the Apple servers over the Internet. That is where you would see "location" updates with the Find My app on your phone.

At first you would see the tag's "last known location." If no other iPhone comes within range for anywhere between 8 & 24 hours, that status will be removed. Only when another iPhone comes within range would you see a location update.

So, you can see a number of things would have to "fall in line" for this to work as you would expect it to.

Something else to think about. Placing the tag inside a wallet, suitcase, etc., can and will obstruct the tag's Bluetooth signal from getting out. In addition, other factors could be the culprit, including a weak battery.

Unfortunately, I do not have an iPhone model that support "precision finding." I only have a lowly 3rd gen iPhone SE, so I can't address anything about this feature with actual experience ...

... but, just so you know, I find the tag's status in the Find My app a bit challenging as well.

For example, I have four AirTags, all of them less than 6 months old. All are used with my vehicle keys and hang on a key rack in the laundry room when not being used. All report at "Home," but two show with different "Last seen times," and two with "Now." Figuring that I didn't have my iPhone within Bluetooth range could have been the reason. However, we do have two other iPhones at the house, and one of the could have been within range. I even brought my phone near them and none of their statuses changed on my phone. Not what I was expecting.

Regardless, this can lead folks, including myself, to a bit of confusion of what exactly that means.

Going back to your situation, it appears you do have an iPhone model that supports precision finding. In theory, when you are actively looking for the tag, your iPhone will switch to a higher level of interaction. When you use the "Precision Finding" feature (available on iPhones with a U1 chip), the iPhone and the AirTag communicate via Ultra-Wideband (UWB) in addition to Bluetooth. This allows for extremely accurate location tracking (down to inches) as you get closer to the AirTag. Again, this is in theory, and since I don't have one of these phone models, I can't verify it for you. Maybe, someone else who does, will chime in and provide you with their experience with this feature.

Looks like you located your wallet! Great job! Maybe both the snow and the retaining wall was enough to prevent the tag's Bluetooth signal from getting out. I've heard of cases where folks try using these tags with their pets, and in some cases, the pet manages to remove them and bury them. Those tags don't work well in that case either.