The tracking fobs track him. Unerringly, though probably over a rather limited range.
We haven't established exactly how the fobs work. Earlier in the thread we were surmising some kind of biometric tracking, but the show hasn't been at all explicit.
It hasn't been clear, but having a tracker actually on Baby Yoda doesn't really "track" as an idea, either. Fobs are used on ALL of the bounties. Or at least those we've seen. So it obviously doesn't make sense that all these people just happen to have trackers implanted in them.
I agree that bio-metric tracking seems to make the most sense. I think this is probably what the "chain code" refers to. He asks for the chain code - is only given a small part of it (age), but the ordinary code might have data on species, gender, etc. Instead of the "chain code", he's said that they do have a Fob on the target, so they usually work hand in hand, I'm guessing.