It wouldn't do much for other uses, like tracking people without their knowledge. A "faked AirTag", could, for example, rotate it's serial number to avoid triggering Apple's "AirTag Found Moving With You" feature. Or the opposite of that. You could stick a fake device on someone's car and trigger the "AirTag Found Moving With You" warning over and over by periodically changing the serial number after the user suppressed the warning for a particular AirTag.
AirPods upgrade firmware automatically, chances are it works in the same way.
Roughly, be in the presence of an iDevice for a certain amount of time under unknown conditions. The advice on the internet is usually something like "leave your AirPods charging and have your phone connected to them when you go to sleep, and they'll probably be updated in the morning".
As far as this method, the IC has thought about this very method for a long time. I’d be surprised if it wasn’t been used in the past.