Can you put Air Tag inside luggage?

If you want to track the luggage, sure. Nearby Apple devices will report an unknown AirTag in proximity, so stowing the luggage in an overhead compartment, under the seat in front of you, or on the overhead rack on a train or bus can cause nearby Apple devices to report the proximity of the AirTag after some unspecified time interval.

If the piece of luggage is large enough, why couldn't you?