I used to be a baggage handler for Atlantic Coast at IAD. In the past four years, I think I checked a bag ONCE. This is combining both revenue and non revenue travel. I have some tips I've developed in my years of being around the industry, and heck, I think I even have a couple of stories to tell:
1. If it's fragile or expensive, don't check it. This includes things like jewelry or electronics. If it is broken, the limits of the airline liability will not cover the value of the contents. If it is lost, well, same deal.
2. NEVER, EVER check medication or irreplacable items. No matter what the reason. I've seen too many elderly check medication that can fit in the zipper pouch of a carry on or a woman's purse, and this causes WAY to much hassle if they need medication on an interrupted trip.
3. If you need it within 24 hours for whatever reason, don't check it. This includes items you may need for a presentation in the morning, suits for a meeting in the morning, or simply that you are going to a destination that is not close to your destination airport (say, a cruise ship).
4. The converse of point 3 is worth stating a little differently: If you need it within 24 hours, CARRY IT ON.
I had a lawyer once point to a cart full of bags asking, "Are those bags going to make it on?" I said, "No sir." Response: "I'm a lawyer, and I have court at 0800 (it was 2100 the night before). I have checked my laptop and I need it for court in the morning." (His laptop had been loaded.)
5. NOT checking bags plainly and simply makes trip interruptions so much easier to deal with. You want to standby for an earlier flight? No problem. You want to get bumped? Here's your voucher, you may go to the hotel now. A last minute cancellation on a large plane? I've heard announcements stating that "for those passengers with checked bags, go to your hotel now, because your bags won't be available until the morning."
6. If you CANNOT carry it on, and the item fits within any of the points above, I'm not kidding, send it Fed Ex.
Regarding the mishandling of luggage... There are a plethora of reasons luggage still gets mishandled. I'm not looking for an argument about the validity of the reasons, as I am not currently employed in a capacity to do anything about it. I am just trying to present a list of all of the reasons I can think of why they might get delayed. Some of these reasons are more applicable to smaller aircraft than bigger planes, but they still may be valid reasons anyway. Here is my list, in no particular order of importance:
1. Human Error. I am listing this reason first because it can be a contributing factor for any other reason listed below. Bags may be overlooked accidentally or thrown into the wrong pile accidentally. I guess I'll throw in baggage falling off a baggage cart enroute. It happens. Human error accounts for a lot of problems during baggage transfer issues. Another issue may be that your bag is NOT going out on the next available flight to a particular city, but rather a later one. Baggage handlers look at city codes first and foremost, and not necessarily flight numbers. It is entirely possible that they put your bag on the next available flight to your destination city, when they should have held it for a later flight. Afterall, who wants to layover longer than they have to?

(I will if it means a cheaper ticket.)
2. Sometimes it may not be physically possible to load the baggage. Each cargo pit has a limit as to how many bags may be loaded. This limit is both an issue of weight and physical size. No matter how small or big the bags are, there is a limit to how much weight can be placed in any cargo hold. Also, no matter how light the bags are, there is a physical space limitation of the bags as well. In this event, the bags are left behind. Period. I could tell you which flights of ours had the highest chance of this happening.
3. If you change your itinerary mid flight (say, same city next flight) the airline may opt to leave your bag on its current flight. If you have issues with the NEXT flight, well, too bad... your bag already got sent to its destination. I am not up on current TSA baggage matching issues, but at one point, either your bag had to be security screened, OR it MUST travel with you. A security screened bag was permitted to be separated from the passenger. Also, I think the rule also read that the pax cannot VOLUNTARILY separate from his or her bag. That is, the airline could choose to separate the two, but if the voluntarily got off the plane, the airline had to remove the bag if it wasn't screened.
4. During IRROPS at my facility (a United hub) we had bags galore in one or two central areas. Finding ONE bag out of even 50 (worse for mainline aircraft) was a chore even IF the bag was in the proper holding area. If it was accidentally mixed with the wrong pile, forget about it. We also didn't staff up for irregular ops, so we had to make do with the employees we had. We basically looked through the appropriate "pile" once, and if we didn't see it (it wasn't there, or we overlooked it) we just went on to the next bag. It is SO easy for us to overlook
5. Carrier to carrier baggage transfer issues. Not really an accidental human error thing but more of an "intentional" thing. DOT/Airline rules state that the last carrier to handle a bag was the carrier who paid the mishandled baggage fees to the customer (delivery etc) and took the accounting hit as well (internal and DOT). This means that when transferring bags from plane to plane, bags going to the OPERATING carrier's flights get priority. When I say operating carrier, I am being so specific as to differentiate Pinnacle, Mesaba, and Northwest mainline. They each run separate companies with separate accounting systems. The same issue applies to "off line" carriers as well. When there is a manpower or time crunch, it is IMPERATIVE for the operating carrier to take care of its own people first.
When I worked for ACA, United picked up its own connecting bags from our ACA flights, yet it delivered our connecting bags from their planes to us. They frequently dropped our connecting bags to us at the very last minute, causing some bags to mis flights.
6. Late inbounds. If a flight is coming in late, the carrier may not assign additional baggage transfer runners. This means that the same guy who may have had an hour to do all of his transfer may now only have 30 minutes. He can only move so fast.
7. There may be weight and balance reasons as to why the bags were not loaded. Aside from the issues addressed earlier, if the airplane as a whole is overweight, the airline has the choice of removing pax or bags. At UA, we removed pax before we removed bags. Yes, it may cost money to reroute a pax on another airiline, but the compensation to the pax effectively cost the airline nothing (or, if you want to be technical, probably about $.02 per mile) and that was IF they actually used it. If they had to pay to put you on another carrier, that cost them real money, but it probably balanced out when they accepted passengers from another airline. Conversely, if you cannot get a bag on a flight, you would have to pay cold hard cash to deliver one bag. That was cold hard cash that would NEVER be "returned" to you in any way, shape, or form.
8. Baggage tagging issues. Some places (generally involves interline transfers) don't know how to tag bags properly. This applies to manually generated baggage tags, which can be in the form of a handwritten tag or a computer generated, but manually created baggage tag. I've seen the flights written in the wrong order (first flight should be on the bottom and final destination should be on top).
I also want to take a couple of minutes to address some paperwork issues with regard to bags. The airline computer systems have a wealth of information. In Apollo (United) one of the features was a list of every checked bag (and thus a baggage count) that was SUPPOSED to be on the flight, based on what happened at the original check in point. This list has its limitations; if somebody made changes enroute (misconnected) or stood by for an earlier flight, that may affect the expected baggage counts but wouldn't necessarily be reflected on the paperwork. Another thing that might happen was that a passenger could have checked in but not boarded. The computer also kept track of connections for us, so we knew how many bags we were expecting from which flights and where they were going. We knew how many transfer bags were going off of an inbound flight and had a list of bags that were coming on to an outbound flight. What I'm trying to say is that these lists help a lot, but many factors throw off the baggage counts so it is not easy to determine that you have every last bag that you are supposed to have.
I also want to talk about baggage scanning. Although we had baggage scan guns, it was not always possible to scan every bag. We did not have one scan gun per plane, we had one or two per gate. For us, a gate could mean six planes. For a "mainline" flight, there are four or so cargo pits that had to get scanned.
The other thing is that the scan guns we had did not work in real time. In order for a scanned bag to be in the global computer network, the scan gun had to be placed in a cradle and uploaded into the computer network. We didn't always have "natural" or "convenient" times to scan a bag. Say, during an IRROPS issue where we were holding hundereds of bags in our central holding area, we might be scanning bags for an hour or two before we bother loading it into the network.
The final comment I wanted to make is about what happens to bags when they actually miss the flight they are supposed to make. Once it has been determined that the bag has been separated from the pax (easily done by checking boarding records) it was given a RUSH status. Rush is simply a marketing issue, as for us, it meant that your bag had LOWEST OF LOW priority for getting on a flight. Basically, the homeless guy who snuck into the wheel well and stowed away got on before your RUSH bag did. In reality, what happened was that they fueled the plane, boarded the passengers (including non revs), boarded checked bags, and THEN determined if there was space (physical or weight) to board your RUSH bag. RUSH bags DID NOT displace bags that matched with pax on that flight. Why? It might mean that your bag got to you 6 hours sooner, but it meant that the airline would have a second unhappy customer that should not have had to be inconvenienced in the first place.
For this reason, the downline station CANNOT tell you for certain when your bag will arrive at the airport. All they can tell you is when the next flight is scheduled to arrive. They can make educated guesses and they can even call the upline station, but they cannot tell for sure until the plane pulls away from the gate. Actually, come to think of it, at UA, there were also messages we could look for in the computer. This message would be from the upline to the downline stating when the bag would finally arrive. This, however, is a manual entry and is subject to change without notice.
Interesting story that comes to mind: I once assisted a passenger at IAD who was connecting to a PHL flight. He was a 1K at UA. He needed to collect his bag at baggage claim and take Amtrak or a rental car to PHL. It was a bad weather day that day, and all the flights were disrupted. He would not leave IAD until he collected his bag and he had been there for about two hours. The scan record at that point showed nothing of note, and we were just waiting to "find" his bag and send him on his merry way. We very well could have had it in the holding pen and overlooked it. I also checked the flight records for that day, and there was no possible way his bag could have gone to PHL on an earlier flight from IAD. The only way for that to happen was to take an earlier flight from DEN (where he started). IIRC, that earlier flight was cancelled. I could only think that if his bag was not at IAD, it HAD to be in DEN. After about another hour of checking his baggage claim numbers into the computer, I got a hit that said his bag had been scanned at the holding area in
*PHL.* I called PHL to confirm that they actually had the bag. Yeah, that's right, as far as I was concerned, the impossible happened. The only thing I could think of was that they mishandled his bag from the get go but decided it was best to get it to PHL in anyway possible. At that point, the ONLY thing they could do was send it via ORD. However, they never sent us any messages until that final scan in PHL. That guy was really pissed. He would have been on his way three hours ago.