Tracking through Find My iPhone?

Someone stole my ipod, and I had the app Find My iPhone. How does it work? It is still trying to locate my ipod. Does I need to connect to Internet for me to track it? Also, if they restore it, will I still be able to track it?

You have to sign into iCloud through here to get started
https://www.icloud.com/....com/#find

You need have it installed before the phone is stolen.