First Proof of Convergence
Although not explicitly asked for by the OP, a convergent sequence can be defined.
Let $F(x) = \frac{x+2}{x+1}$ and $p_0 \gt 0$ a rational number. Define the sequence
$$\tag 1 p_{k+1} = F(p_k), \quad \text{ for } k \ge 0$$
Now J. W. Tanner's answer tells us that $(p_k)$ is alternating about $\sqrt 2$ with each term getting closer.
To show convergence we can also assume that $p_0 \lt \sqrt 2$, so that we have an increasing sub-sequence
$$\tag 2 {(p_{2k})}_{\, k \ge 0} \text{ with each } p_{2k} \lt \sqrt 2$$
But to skip the odd entries, we can construct the function
$$\tag 3 G(x) = F \circ F(x) = \frac{3x+4}{2x+3}$$
so that
$$\tag 4 p_{2(k+1)} = \frac{3p_{2k}+4}{2p_{2k}+3}$$
The increasing bounded sequence $\text{(2)}$ has a limit $\alpha \gt 0$ and the following is also true,
$$\tag 5 \lim_{k\to +\infty} p_{2k} - p_{2(k+1)} = \lim_{k\to +\infty} p_{2k} - \frac{3p_{2k}+4}{2p_{2k}+3} = 0$$
Using more basic properties of limits, we can also write
$$\tag 5 \alpha - \frac{3\alpha+4}{2\alpha+3} = 0$$
and simple algebra shows that $\alpha = \sqrt 2$.
Using the fact that each next term is better as we alternate around $\sqrt2$, we must conclude that the starting sequence $\text{(1)}$ also converges to it.
Second Proof of Convergence
Following J. W. Tanner's hints (see comments), there is a simpler way to prove convergence via the following identity,
$\tag 6 \text{For every } x \in \Bbb R \setminus \{-1\}, \quad F(x) - \sqrt 2 = (x-\sqrt2) \left(\frac{1}{1+x}\right)\left(1-\sqrt2\right)$
We can use $\text{(6)}$ since the terms of our sequence $(p_k)$ contain only positive numbers. Moreover, to show convergence we can assume that $|p_0 - \sqrt 2| \lt 1$. But then
$\tag 7 \text{For every } k \ge 0, \quad |p_{k+1}-\sqrt2|<(\sqrt2 -1)^k$
and we have convergence.