I am curious how a .onion domain seizure works. Does this mean the various law enforcement agencies are in possession of the private keys of the services they shut down?
How do they find the physical location? This could be by plenty of technical methods, which is really too elaborate to expand on here, but it's almost certainly not a flaw in Tor itself. It's just very hard to do it all correctly from A through Z, one mistake and you're busted, so that's why so many services can be taken down.