Thats the only way i can think of it as a weapon working.
While cloaked (maybe also while disguised) the spy can tag enemies, up to 3 max.
Tagged enemies show up through walls to you and other spies on medium range, and the tags disappear when you die, as well if enemies are ligthed on fire.
less max health or no crits and or reduces cloak when you put each tag.

Another alternative lets the player tag one or upt to 3 player (while cloaked/disguised) without the wall seeing, but tags remain after you die (but disapear if the enemy die or change class). Only you can see then through walls on a shorter range or it increases their hitbox slight (their back) while tagged.

another con could be an extra delay on backstabing non-tagged targets