AirTags themselves have no notion of location. It’s iPhones that do and it also depends on how many iPhone users are in the area of your AirTag. So, when you come close to a vicinity where there are enough iPhone users, the GPS will update fairly frequently as every 60-120 seconds. Once the connection is made, the AirTag’s unique ID is sent to the iPhone and then sent by the iPhone to the Find My network along with the iPhone’s current location.
You will also see the “Last Seen” notification appearing on your screen. As soon as iPhone connects to the “Find My” network, the “Last Seen” tells you the last time your AirTag came into contact with an iOS device that relayed its whereabouts to the network. If the “Last Seen” update indicates a distant period, it probably means your tracking gadget has been quite far away with interrupted connections to the iPhones around.