Ok, there's a difference between the information within the bag tag and the bag tag number. Talking about the latter, the IATA manual says the following:




Example no. 2 above shows a bag tag with number 0152123456, for a total of 10 digits, however the proper bag tag, the one most BRS will read, is 9-digits long. The first digit is often used by the airline to give "meaning" to the bag, and it might differ from airline to airline. I seem to recall that AA had a specific digit for short connections, another for expedited bag tags, another for First class and so on. BA didn't used to use it for a long time, and in fact most bags are headed with 0. Then 152 is the airline's identifier. AA's 001, BA's 125. Then there's the 123456, which is the airline's bag tag number, the one that changes for every bag. While there are potentially a million combinations, in reality for most airlines the total number is lower than that as some ranges are reserved for, say, testing or other purposes.
All IATA airlines I know of recycle bag tag numbers. Some cycle them every 7 days, some more, some less. Eventually, bag tag number 0125123456 will be purged and given to another traveller. And so on. And so on...

The information within the bag tag, though, is different. When I have a scanner, say for instance one of Brock's, and I scan a bag tag I see the name of the owner, the itinerary, the cabin and any other status the airline wants to give to the bag (short connection, long, class and so on). That's obviously individual to the bag tag and is information readable through the barcode. The bag tag number, this though, on the airlines I know of, is recycled.

So, to summarise, while the information within the bag tag is unique, the licence plate isn't. So a bag can be tagged with a fresh bag tag, licence number 0125123456 which says that it belongs to Mr. 13901, travelling LHR-SCL today 28MAR2021 in First (a man can dream!). But I might've left a stub on it, from a previous flight, bag tag number 9001654321. T5's Baggage Reconciliation System processes my bag and, then, as it's going out of the bag store to head over to the laterals to be put into a bin, scans the old 9001 tag. By pure coincidence Heathrow has seen that tag one day ago, it was Joe Blogg's! He was flying London-Dallas 27MAR2021... what to do? Today most BRSs have enhanced logic where the system retraces its steps and sees that bag can't possibly have changed identity, but if it's well and truly confused it'll spit out the bag on a specific belt for manual check by an operator... and if there's little time the bag might miss its flight.