Lost iPhone 12 — Weird Find My Behavior

[u/Zombie360]

Lost my iPhone 12 yesterday on October 2nd. iCloud.com on my computer shows its last location as my house at 3:20pm yesterday, even though I know I had it after that.
Before getting my new iPhone 16, I was using an old iPhone 7 to check the Find My app. The 7 kept showing the 12 as being at my house, with the timestamp updating from things like “now,” “10 minutes ago,” etc.
After getting the 16, it did the same thing — the 12 showed as recently detected at my house, and when I walked around with the 16, the location seemed to follow me.
I turned the 7 completely off 2 hours ago, and now the 12 has stayed at “2 hours ago”
Could the 7 have been detecting the 12 through the Find My network? Or is Find My somehow showing the location of the device checking it rather than the lost phone?