I'm not sure if this issue was with Bitwarden's own hosted version, but I've noticed on multiple occasions that it gets weird and it's always a version mismatch issue. I got this master password prompt because my browser extensions auto update, my server does not. I updated VaultWarden on my server and that resolved the issue.
They really need to add version warnings in the clients. e.g. "your server is in X.X.X and is out of date for use with this app and may not work properly, continue?".
As for backups - I use Docker and backup my entire VaultWarden instance daily. If something goes wrong I can restore an older backup and try again.