Just tested this. You have to get around 100m from the air tag, II had bi BT signal) before you will be allowed to toggle settings or change anything in Lost mode or notifications. Then once back in range yu cant turn it off, its greyed out. But after a short while you will get the notification, and the notification toggle changes to off on its own.
Still dont know why you would have this limitation. I would like to be able to use this when I just lose something in the house, but at a greater range than UWB..