Okay first off those cakes in your signature are AMAZINGLY cute.
We are Annual Passholders. On our (on-site) trip last May, we were able to get the hard plastic RFID-enabled AP cards. They're about the size and thickness of a credit card.
We stayed onsite again a few weeks ago. We were sent MagicBands a month ahead of time, and I was able to attach our APs to them on the website with (relatively) few problems.
What you are really doing is attaching your AP to your MyMagic profile (each of our family members has a profile with our AP attached to it now), and I had to do that by entering each person's Passholder number on the site.
Separately, MagicBands were shipped, each attached to a person in the family. So MagicBand is attached to Profile the same as an AP (or even a length of stay pass, whatever) is attached to Profile. Now that we have MagicBands, we can continue using them for park admission even if we aren't staying onsite, since they just reference our profile which references our APs.
If you have no plans to stay onsite, I believe you'll have to continue using the card. At one point I heard they were going to be "selling" MagicBands for AP and offsite guests if they wanted one, but all I saw in the stores when we were there was MagicBand accessories so I don't think that's true at this time.
ETA: Regarding the discussion about how many days you can book Fast Pass + times - we were there for 9 days and we booked for all of them, in advance. That could have been because we were onsite guests. Right now, if I look to see what dates I can pick additional Fast Pass + for, it only goes 60 days out (3/18 as of today). I do not know, if you are not onsite, what the rules are for picking passes, but the 7 day limit sounds reasonable to me, if true.