So this is not totally resolved in-universe, but the Chain Code is the Star Wars equivalent of a Social Security Number, and currently we think 'Chain' references your chain of genetic information. :) Basically, your DNA is 100% unique (even in in-universe cloning, actually) and that is kind of what they code to make into a Chain Code. My best guess, at least!
Given that one section of the code referred to Grogu's age (50 years old?), we can assume that parts of the code are 'simplified' for reading, probably for details like planet of origin, species, sex, age, etc.
Since obviously Grogu isn't leaving a credit card trail, and CCTV wouldn't be a problem on a planet like Sorgum, it seems like we can rule out any kind of large electronic database for tracking, excepting the case where somehow they biologically scan every organism on every planet, and I feel like that's a large enough narrative point someone would have made it. It seems to me that there must be a biological tracking component then, since the digital trail option seems implausible, and there are a couple semi-feasible ways to go about that. 1. The fob actually somehow tracks genetic material left behind. Humans leave a lot of it hair, skin cells, pheromones and oils) but it seems like the fobs hone in on a target from any direction rather than following a specific trail, ruling this option out. Second, the fob actually tracks your genetic signature- while difficult to explain without something like that globe-scanner I mentioned earlier, this 'homing-beacon' type approach seems most likely for the Star Wars universe, and bears some resemblance to start fighter targeting computers. Option 3 is that the 'scanner' is actually a component of the fob somehow, and has the range to track through space and from one planet to another. This part is a bit fuzzy, but seems to fit how people keep dropping out of hyperspace to shoot up the Razor Crest.