Due to the inherent inaccuracy of the internal RC oscillator circuit (there's going to be some level of error), 8MHz isn't entirely reliable. However, dividing by 8 to get 1MHz also divides the error by 8, so the 1MHz clock speed is probably more accurate than the 8MHz clock speed.
Also, not all AVRs have the same fuse bits - the ATMega32 might be one of the ones without a dedicated CKDIV8 bit, and instead just have clock selector options. Use the dropdown menu in the calculator to configure the options for you - it's much easier.