What happens to your bag when you use arrivals lounges??

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If you're talking about using an airside lounge (eg using Qantas Club), then scenarios include : your bag could go around and around, end up in lost baggage, you get called and asked why you didn't collect it, someone else could take it.

That happened to a colleague in SYD in the earlier 90's after arriving from a TN flight ex MEL & having a couple of sherbets on arrival at what would then have been called the Flight Deck Club. Upon arriving probably 20-30 minutes later at the baggage carousel the bag was missing however it must have had some kind of distinct identification on it as the baggage services person remembered seeing it going round the carousel so it was stolen by someone who had obviously noticed the said bags doing one too many laps.

If I was travelling with checked luggage in your situation I would only go to the lounge if I had first collected my bags & either taken them with me through security or put them landside in a locker if the bag contained sharps or similar.

I guess you could go to the lounge and ask one of the lounge angels if they could call baggage services and ask if it's possible for them to take your bag off the belt & hold it aside for later collection but that would be the exception rather than the rule.

Well in the unlikely scenario where the above applies but one's suitcase remains within the weight restriction for carry on, The official guideline, as stated in the DYKWIA handbook, is to display one's 'Q Bag Tag' with your appropriate status visible (or a bag tag showing higher status if it was acquired on eBay or retained from a previously achieved high status), on said carry on luggage.

Attach two tags if ego permits.

Ego is not a dirty word slc! ;)
 
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I do this quite regularly on both Qantas and Virgin.

SYD and BNE they generally collect the luggage off the belt after ~20m-30m depending on how busy they are at the time. You will more than likely receive a call from baggage services after ~30m-45m asking if you have forgotten your bag. I was called last night by QF in BNE as we were leaving lounge.

At OOL they seem to collect the remaining bags off carousel after ~15m-20m as it is a smaller airport. I have received a call there as well.
 
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