“Connection” means two way communication. iPhone acts only as a receiver,
Well, arguably, that constitutes a connection, but I see where you're coming from.
That said, if you lose your device in your own vicinity and put the Airtag into lost mode, there is very much 2 way communication going on as the phone can trigger the tag to make a pinging noise, etc.
I did some experimentation with my iPhone having my daughter hide the airtag in random places and the U1 directional chip in them does an amazing job literally popping up an arrow on the iPhone telling you what direction to walk in even. They really are pretty slick.