Fenix 7x needs to have permissions fully enabled "always on" in order to use the find my phone function. Without "always on" proximity will work, however sound and light will not work.
It must be the location permission. Of all the allowed permissions, only the location permission has the option for "Allow all the time."

Which Android Version are you on? Between Android Version 6 and 11, location permission is needed for certain Bluetooth functions to work. That could be the reason you need to always grant location permission for "Find Phone" to work.
location permission is needed
Understood, but we are referring to the 3rd option to not only allow, but to allow all the time.
I can't speak for the OP 8526732, but I'm on Android version 10. I believe the OP was referring to the "Allow all the time" option vs. the "Allow only while using the app" option. Personally, I'm not having any issues with this and don't mind having it set this way. Of course, never "deny" as that would cause a lot of functions to cease working.