Very good question.
I suspect - albeit w/o any rock-solid basis or personal testing - that it’s at least partially dependent on Apple’s “Offline Finding” capability; whereby it uses the device’s bluetooth to geolocate using other “cooperating” devices. (same method used to geolocate “out of own device range” AirTags)
From my research, this bluetooth beacon apparently “fires up” anytime the computer is powered-on.
Obviously for this to work, “the planets would have to be aligned” device and comms-wise …
… but going forward, Apple’s iOS 15 release infers that the system will keep this - or some other flavor - “beaconing” active even when devices are turned “off.”
I’ve personally tested that offline-finding system DOES INDEED work w/ a “lost” not on any network WiFi-only iPad … haven’t tried it w/ my MacBook (yet).
There is an interesting discussion of the general methodology in two Apple Platform Security articles starting here:
(BTW, the cryptologic methods used are indeed BRILLIANT)
https://support.apple.com/en-au/guide/security/sec6cbc80fd0/web