Definitively: v7 works with stand-alone / non agilebits-synced databases; v8 will not. (I think v8 is out for Windows but not yet Mac.)
I am a long-time 1Password user who recently made the leap to their hosted service. 1Password remains best-in-class for me and has a terrific security record, especially compared to their peers. While I too lament the everything-is-a-subscription-now trend, I remain a strong supporter and avid fan of 1Password.
The latest integrations offered, for browsers and for e.g. Fastmail masked email address generation [1], only work with the cloud offering. I am happy to report that these latest offerings are fantastic and have tremendous UX.