Bluetooth tracking built into iOS?
Yes - Apple’s API/SDK and framework for location aware Bluetooth technology is branded iBeacon.

https://developer.apple.com/ibeacon/

It is designed for your device to orient itself and take actions as soon as it comes within range of known devices. Look for this to get another jolt of attention when iOS 14 ships with App Clips and App Clip Codes.

https://developer.apple.com/app-clips/

For tracking people, I would look first at the best dog tracker around (IMO).

https://tryfi.com/

Mount that puppy on a bag, helmet or backpack until your children are old enough to merit their own smart device that uses Apple Find My tracking would be my advice for parents invested in the Apple ecosystem.