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Note though, not all games support this, and if you're logged in, she can't use the same game at the same time you are.
FYI
Sharing the same Steam account with your daughter (but giving her a window's or OS account of her own) is *technically* breaking Steam's SSA. Just so you know.
What you should do is make her a Steam Account of her own... then Family Share your games with her.
Then.. since she's only 8... inside her own Steam account (not your Steam account), activate Family View mode, which will allow you to limit content of various ratings, and prevent her from being able to use the forums and other stuff like that you might like to shield her from.
Steam Family Share
and
Steam Family View
Are two different things, and someone in your situation should probably use both.
~
That said, sharing your account with your 8 year old probably won't get you into trouble, but it is technically breaching the terms of service/SSA that you agreed to when you created your account.
~
Edit: Altho maybe i misunderstood what you meant when you said "create a local account" for your daughter..
Please note: The minimum age for a Steam account is 13.
That's the minimum age to create your own Steam account. Valve make it very clear that parents are welcome to make an account for their young children.
If you don't create your daughter her own Windows account, you'll run into many save game issues, as most save games are saved in User documents or userdata folders.