I'm having a similar issue. I have 4 Airtags but not one of them track well. They did when I first bought them.
Example - When my daughter leaves school, it shows she's still at school even when she's half way home.
Another example, when my wife leaves work, it just will not track.
And then randomly, the location will skip to a location they were at. This continues all the way till they get home. And when they do, the airtag will show them being a few miles away.
I appreciate airtags aren't tracking items, and they need another iphone nearby, which for my wife isn't an issue. So does this all seem right and how they should work?