Master mode allows you to transmit from the XF's keyboard on as many as eight separate MIDI Channels. It is the only mode on the XF that allows multiple Midi channel transmit real time from the keys.

That said, it certainly is not the only option you have on the Cubase (receiving) side. It is not at all clear in your question what you feel you gain so it would be impossible to tell you an answer about what trouble you might get into. Remember, when you press a note on your controller keyboard, the MIDI event generated already includes the channel it was generated on. The MIDI Channel setting ("CH") you see in Cubase is the software re-channelizing the data via the Tracks MIDI OUT.

You may want to investigate the INPUT TRANSFORMER and your programming option through your MySteinberg account or on the Cubase forum over at Steinberg.net.

By setting the Channel parameter to "ANY" your Cubase track will simply not rechannelize the data it receives... So the channel you are transmitting will be echoed back out as received. The Input Transformer allows you to setup various criteria for data to be allowed into a track. I only use it for really simple stuff, perhaps it will give you options to divide incoming data (sorting certain notes to certain tracks) - might be worth investigating.

They mention separate Left/Right hand recording in this video:
https://youtu.be/vrShi1z2W3E

What I was thinking was that I could play a lead instrument with my right hand, bass with my left hand, and have the two instruments record to two separate Cubase tracks.

My concern was what might happen to the settings for the Motif XF VST that are stored in the Cubase project. When I hit the MASTER button, the VST goes offline. I’ve discovered that I can get it back to be ONLINE by clicking the button in the VST, but I worry about whether yanking things out from under the VST like this is a good idea.

Given that it involves Master mode and the Yamaha VST, I thought it might be appropriate to ask about this here.

I will definitely investigate the Input Transformer. The video was a good introduction. Thanks…

My concern was what might happen to the settings for the Motif XF VST that are stored in the Cubase project. When I hit the MASTER button, the VST goes offline. I’ve discovered that I can get it back to be ONLINE by clicking the button in the VST, but I worry about whether yanking things out from under the VST like this is a good idea.

Oh, I see... No worries, when you go to MASTER mode, as you observed, the Editor dutifully goes OFFLINE - it remains ready but is not reflecting a 1:1 relationship with the hardware. This does not adversely affect your stored/saved preferences for the XF in Cubase. When you are finished using MASTER mode, you can simply bring the EDITOR back ONLINE by returning to SONG (or PATTERN) mode.

ONLINE status means that the Editor reflects, exactly, the condition of your hardware. Since the Editor does not support MASTER mode (or PERFORMANCE mode), when you move to a non-supported mode, the Editor dutifully goes OFFLINE and awaits your return. This allows you to do other tasks without disturbing what gets stored to your Cubase Project.

When you are finished using MASTER mode, you can simply bring the EDITOR back ONLINE by returning to SONG (or PATTERN) mode.

I tried this, but it didn't work. The VST Editor stayed offline until I clicked the ONLINE button. It came back online fine when I did that.

Does this mean that there may be something wrong with how I have things set up? If so, do you have any thoughts about what that might be?

No that is how you always bring the Editor back ONLINE, but you must be in one of the three modes the Editor supports: Voice, Song or Pattern when you click OFFLINE/ONLINE.