If indoor is so inaccurate, how does Apple find AirTags then?

Apple use UWB[0] for nearby location sensing.

[0] https://en.wikipedia.org/wiki/Apple_silicon#Apple_U1

My understanding is they use bluetooth for coarse positioning (e.g. you're within 30 feet) then they use a special chip (ultra-wide band) for the precision location (within a foot or two).

Of course, there's a good bit of magic within all of that to make it work seamlessly.

Sounds to me like it is not a difficult problem except for the fact that they want to make it work with existing smartphones (both iOS and Android).