Can a kid play 8th grade and varsity basketball at the same time?

I don't think there is any regulation against it. I'm not sure what playing at the 8th grade level is good for if they are good enough for varsity minutes.

Yes they can... But it's kind of silly.

 

Hoptown has a varsity starter that they also start on their freshman team. Not sure why they would do that?

I know of situations where this has happened, so I believe it is permissible.

Where I have seen it happen is when the varsity is short on players for a particular game and 8th grade players are used because bodies are needed.

Yes

If there is a rule it usually comes from the middle school conference or league. In some middle school leagues they do not want Varsity Players playing in their middle school tournaments.

Yes they can... But it's kind of silly.

 

Hoptown has a varsity starter that they also start on their freshman team. Not sure why they would do that?

Knowing nothing about this particular situation, I would guess the coach is trying to get the player more game experience. Also playing against your age group could give the player some confidence that translates over into success at the varsity level.