Does everyone in your party need magic bands if two already have for fast pass purposes?

Not exactly. A fast pass is only good for 1 person per reservation. An admission card can be given and synced for Fast Passes. In order for everyone to get through a FastPass, yes, every person in the party must have a fast pass.

Correct, magic bands are just a fancier way of being able to sync your admission pass, fast passes, and even payment options for the restaurants and shops. They are not necessary and they still have the kiosks that accept a physical admission pass for your fast pass

Only good for one person

Good for 1 person AND THE LINE IS REALLY FAST