Having setup local storage sync, I've configured local sync on the mac 1Password app then I copy the agilekeychain file on to my device. How are entries created on my device sync'd back to the master file on my computer?
Syncing with 1Password 4 beta on Android can essentially broken down into two parts: the part that 1Password handles and the "other" part. The part that 1Password handles is making sure that the data in its internal database is synced with the data in the .agilekeychain folder. The "other" part involves keeping the .agilekeychain folder synced across multiple devices.
When you choose folder sync during setup, you are telling 1Password that you want to choose your own app or cloud-based service to handle keeping the .agilekeychain folder synced across your devices. If, however, you would prefer not to have to manage this yourself, then you may find the Dropbox syncing option more appealing.
I hope that explanation helps! Please let us know if you have any other questions.