Can you use an AirTag to find your dog?
Can the tracker thing be used to find a dog if you put it in a waterproof bag on the dog’s collar?
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Assuming by "tracker thing" you mean the AirTags, yes, you could potentially do that, but Apple discourages its use on Pets. Don't blame Apple if the AirTag breaks or stops working and you are unable to track your pet.
https://www.makeuseof.com/should-you-use-airtags-as-pet-trackers/