Go for it. They're inexpensive, handy, and easy to set up and use. I currently use it for everything from logging in to my laptop and using sudo (via PAM) to SSH (gpg-agent) to logging in to GitHub and other sites (via U2F).
I've not used 1Password, so I don't know. The Yubico site should be able to tell you if a given thing is compatible.
> What do I do if I lose my YubiKey, are there recovery options?
Nope. Get two of them.
> Do you use it in addition to an authenticator app or instead of?
Sort of both. So if a site supports the use of an authenticator app but not FIDO U2F, I use the Yubico authenticator app. When opened, it stays locked until my Yubikey is tapped against my phone.
Also I am a bit of a scatterbrains so prone to losing things. What do I do if I lose my YubiKey, are there recovery options?
Do you use it in addition to an authenticator app or instead of? I am really confused as to the advantages it gives.