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The method used for this appears to be similar to the enhanced Find My AirPods feature that Apple added in iOS 15. Like the Siri Remote, most of Apple’s AirPods don’t feature an ultra wideband chip, so Apple relies on Bluetooth proximity detection. That’s why you don’t get an exact directional arrow like you do with an AirTag, but rather just an indication of how near or far they are from your current location. Still, that should be good enough for locating your AirPods around your home. The proximity range is sensitive enough that you’ll need to be within about a foot of your Siri Remote before your iPhone detects it as “here,” which should be close enough to figure out where it’s actually hiding.