Apple products communicate with each other even if they don't know each other, so an airtag will utilize the cellular of a nearby iphone in order to get information to apple's servers. I think google has a tracker that does something similar.

Its easy to imagine that previous generation tracking devices that sends its information across a broader range than an airtag will need to be larger battery thus being larger.

Probably because it utilizes Apple network and maybe iPhones are the devices mostly used by drug dealers?