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Unrelated to the heading of this post, but looking at the screenshot it seems that it supports OTP generation within the app.

Having one place that both stores your password and generates the OTP seems to defeat the purpose of 2FA no?

Yes and no. A much better explanation than I can give here is covered in our blog post: https://blog.1password.com/totp-for-1password-users/ - Ben, 1Password

It's better than not using 2FA.