Sandbagging? Or normal?

Why am I being set up for +8/-8 games against players who are down 400 points from their highest level? How is this fair?

It is fair because they are rated close to you currently if you have +8/-8 set up. Some people also create their account with an inflated rating and then they crash a bunch and stabilize around their actual rating. Just because someone is 400 points lower than their all-time peak rating, this doesn't necessarily mean that peak rating was a level they were ever "really" at. If they were consistently on that level, then they would be rated near there and now 400 point below it now.

It very well might be "normal."

Ahhh.. thanks. I thought everybody started with a 1200 rating.

I think I was pitted against you yesterday, and I saw your chat request later. You said you didn’t want to play against someone whose peak is 1600 or higher. Well, you see, I got to 1600 on a lucky win streak, but that doesn’t necessarily mean I am sandbagging. The last two days, I have been having mental fog and losing streaks. That's why my elo is below 1500. It always ranges from 1400–1550. 1600 points is something I get on a very lucky day or when I am completely in form.

You can forget about fair ratings on this site, this is a fact I know all too well and while I won't get into why.  I wouldn't be bothered with it too much, just play whoever they pair you with.  I'm not going to argue with anyone on this issue but I am super convinced that the ratings are very inaccurate on this site, it is what it is.  Furthermore, I wouldn't worry about ratings and I'd focus on improvement instead if I were you, losing is painful and sadly it's also inevitable, I know all too well, it will happen, even against someone who is "below" your rating here, or .......so the number says.

This is an interesting topic for me as I have similar experience.  Sometimes, I have good days where I'm playing fast and accurate and gain a lot of points.  Other times, I have trouble concentrating, miss obvious moves, can't calculate, play slowly, and blunder too many times.  It is frustrating to me and I keep playing saying to myself, "I'm better than this, my next game will be a good one."  Unfortunately, it usually leads me to lose 100 points or more!  A few of those streaks and I'm much lower rated than I "should" be.  I'll make the points back, but it takes time.  Anyway,  I'm just glad I'm not the only one

When new members create a new account, chess.com asks you to estimate your experience level. It was something like (Beginner, Intermediate, Advanced and Expert). All this did was set your starting rating at a certain level, but if you estimated vastly different from reality, you would quickly stabilize as you played games. I don't remember the exact numbers each rating starts at, but it was something like:

Beginner: 800

Intermediate: 1200

Advanced: 1600

Expert: 2000

What ended up happening was people thinking they were so good because they beat their friend in a chess game or something similar...and then they play "real chess players" on the site who know more than the basic rules and they get crushed. Many people would begin at 2000 rating or something far higher than they were and then their rating would soon crash as they can't play well at that level. It wasn't uncommon for someone to begin at 2000 and then stabilize below 1000 rating.

chess.com realized most were not as good as they thought and they eliminated the "Expert" option. Now chess.com asks something like Beginner, Intermediate, or Advanced so that 1600-ish is the highest you can begin. chess.com also refined even this system so that you must play at least 5 games first before your rating displays in live chess. This gives a little more time to stabilize your rating. 

We've discussed this in the past @chesslover0_0 and I respect your (perhaps accurate) observation that there are more players under-rated at the sub-1200 threshold. However, the ratings are still accurate as they are intended. It just so happens that we can't take only rating and disproportionately believe this translates to ability or potential. 

Rating (regardless of how it is calculated) is always only an estimate based on past performance. The best chess rating systems (elo, glicko, and so on) are only as good as their sample size and they only go off of results. They do not factor in opening repertoire, person playstyles or chess strengths/weaknesses. Ratings only go off of wins, draws and losses to estimate performance.

I've been off my peak by up to 300 points. Statistically, it shouldn't be surprising to occasionally find wild deviations from "actual skill level" in a large population that plays a large number of games at relatively fast time controls.

Well you're entitled to your opinion, as I said, I will not argue it or debate it, I said what I said, I stand by it.  I do not agree with that statement, the ratings are clearly NOT accurate on this site, and you're right we have talked about this before.   I know one can say that it's an estimate of your rating, I don't even believe that but you're entitled to your opinion.  I know from experience.......what I speak of........it is what it is.