That confused me at first too.You aren’t diffusing the 8k image.
You are upsampling, then inpainting sections that need it. So if you took your 8K and inpainted a section with 1024x1024 that works well with normal ram usages. In Auto1111, you need to select “inpainted masked area” to do that.
Yeah exactly this. It doesn't need more VRAM since you inpaint small sections (~512x515) of the image manually. It takes more time but gives the best results.
The automated equivalent is SD Upscale or TiledVAE