Earlier quoted context omitted.
Keeping your password and your OTP generator in 1Password is not TWO-factor-authentication (2FA). Since you only need your master password to get both. https://blog.agilebits.com/2015/01/26/totp-for-1password-use... (See the "Second Factor? No." bit). In the case where you need true second factor authentication, it needs to be another factor (i.e. device). This is a good place to have a Fido U2F key. In my experience…
You also need to have the password database. Having the master password alone is not sufficient, and having the password database is not sufficient. And of course the master password never gets transmitted over the network, so it's harder to get. If your threat model is an attacker that's compromised your specific computer (as opposed to a network attacker) then yeah, having the OTP code in your password manager isn'…
Regardless of where your password database is, the attacker only needs to compromise 1 password on the website to access your account. It doesn't matter how they got that password, your physical devices are irrelevant.
With 2FA, the attacker would also need access to the secondary device that has the secondary authentication, whether that be a phone, RSA key, FIDO key, etc.
1Password is not "real" or "fake" 2FA, it's straight up not 2FA at all and doesn't claim to be. It's fine to not want 2FA if you don't handle high-risk data (though that's increasingly rare these days in reality), but lets not conflate the term =P