$65 gets you a single license for Mac and Windows. This can be installed on multiple Macs or PCs you own, but is generally for 1 single person.
You get all updates to 1Password 6 for Mac for free, and any updates to 1Password 4 for Windows for free. On the Mac side, we are planning a 6.5 release in the next couple months. Most of the changes in this release will center around 1Password Teams/Families/Individuals (the subscription option). Along with bug fixes that likely impact both. We are likely nearing the end of the road on version 6 after that.
With the $5/mo you can technically do two things...
1. You can use the hosted solution 2. You can create local vaults (like the standalone version does) and sync those using Dropbox, iCloud or Wifi (to mobile devices)
So, with the subscription option, you get both. Whether you use the hosted part of it or not is up to you. However, if the subscription goes into frozen state (unpaid) the app will go into Trial mode, which limits you unless you re-subscribe or purchase a standalone license.
I currently use both local vaults and the vaults for my work Team and Family account. Mostly the local vaults are for testing purposes but it all works fine with a subscription.
Let me know if that helps :)
Kyle
AgileBits