Obviously, the app will need that access privilege to perform its task. Now, you’re in the bind: Do you trust apple to use these privileges on the device only - and not track you - or do you care about being tracked by others. Depends on your risk profile, I’d say.

I'm more concerned about Apple at the moment, I guess we'll see how common AirTag stalking becomes.

Android requires Location permissions to scan for Bluetooth devices because if you can scan for Bluetooth you can sometimes get the user's location from various online databases, so the permissions would be functionally identical if they were sperate anyway.