Does Instagram notify someone when you unfollow them?

No. Instagram does not notify someone when you unfollow them. There is no alert, message, or activity entry for an unfollow. The only way someone notices is by checking their own follower list and realizing you're no longer on it.

What is and isn't visible

Unfollowing, removing a follower, muting, and blocking are all silent — none generate a notification. Following someone, liking, and commenting are visible. Restricting an account is also silent.

Because nothing is announced, the practical way to track who unfollowed you over time is to compare your follower list between two points in time — which is exactly what a snapshot diff does.

How to track unfollows yourself

Download your Instagram data periodically and compare snapshots. Glimpsr stores each export on your device and shows you who you lost and gained between any two, with no password and no notification to anyone.