FYI, I spent some more time troubleshooting and might have found the root cause. I had switched to 1Password 8 Beta before it was released because I enjoyed the updated UI. Once version 8 was officially released, I switched to the Stable channel, but the desktop app was stuck on the old beta version. So, beta was old, but the extension kept getting updated likely causing the bad behavior.
I uninstalled the macOS beta app and reinstalled the stable version. It seems to be working fine for the last day or so.
I uninstalled the macOS beta app and reinstalled the stable version. It seems to be working fine for the last day or so.