How does Find My know if my offline device is at home?

Unfortunately I lost my iPhone SE (running iOS 16) a couple of weeks ago. On Find My it shows that it's at home, even though the actual location shown is a couple of buildings behind my own building. I was convinced it was at home for the longest time because of this reason but I searched everywhere with no luck. I tried to test it by parking close to where my iPhone SE shows the actual location and leaving my iPhone 7 in the car.

So now my iPhone 7 and my (lost) iPhone SE show their locations as close to each other but the interesting thing is that my iPhone 7 shows that it's NOT at home but my iPhone SE shows that it's home. Does anyone know how that's determined?

For the sake of the experiment, I had the conditions set up on my iPhone 7 the same as my lost iPhone SE before I placed it in the car, so I was somewhere other than home then I parked near home and left the phone in the car with Bluetooth on and Wifi turned off. The last wifi network both phones connected to aren't home's.

I attached some images on how that looks like on Find My on my mac. In the second image it shows that my iPhone 12 and iPhone SE are at home but the location of the home icon is incorrect actually, it should be a few hundred meters to the top.