Running 4.4.2 KitKat. Does the OS really take up 7GB? I've only got like 5 games downloaded and already running out of space for apps. :(
and welcome to the Android Enthusiasts Stack Exchange.
Android partitions are an odd subject, especially when you're used to Windows-esque devices. Android runs on a version of Linux, and it's root directories are split up into partitions on your device. When a manufacturer says their device is 8GB, they mean exactly that - in total, you have 8GB.
All the Linux partitions on your device each have their own allotment of storage space. For example, /recovery may take 200MB, /cache may take 1GB, etc etc. Long story short is this: with an 8GB tablet, yes, the OS will take up a substantial amount of storage space. I'm guessing you have around 1GB free to install applications.