ie If someone takes your bike, does it use their iphone to ping the signal? And if it does, does their phone not just tell them their is an Air Tag near by?
Yes and yes. Effectively every iPhone within bluetooth range gets it’s signal and reports it’s location. It works well because iPhones are so ubiquitous, unless you get rid of the tag it’ll keep pinging off other peoples phones even if the thief is on android.
Yes if it’s following you you get a message to say you’re being followed to avoid the case where someone could slip the tag in your bag/car then follow you home. Hence why it’s imperfect (but better than nothing) for tracking a stolen bike.
There are other options, but they have their own downsides. Proper GPS trackers drain the battery and require a sim contract (and a signal) to send the data. Non-apple “airtag” type devices rely on someone nearby using the same app which is far less common than just any iPhone.