When you are using OTP based on HOTP or TOTP locally you need to store the seed somewhere. So you store the seed on this local machine.
Now it depends on your threats.
This may very well protect you against shoulder surfers or maybe keyloggers. But it will not protect you against local attacks.
But the question is, if you do not have a bigger problem, if someone is able to perform a local attack.
If you try to use OTP for encryption, this is just eye candy. You are encrypting things to protect against local attacks.
You encrypt your harddisk, because you want to avoid an thieve getting into your data. You are using keepass, because you want to avoid a thieve who is grabbing the file to access this file.
How does encryption work? You have a symmetric AES key which is either encrypted by your passphrase or which is generated out or your passphrase. Everyone would choose the first, to be able to change the passphrase.
The threat is the physical theft of your file. ...protected by your passphrase.
So as @Jakuje pointed out: How should OTP help you? You need to store the seed. How would you protect the seed against a thieve with local access? Encrypt it! How? With a passphrase? => only one factor.
You could however create a more complex scenario with HOTP (not TOTP!) and encrypt the seed with the next OTP value. Then, the next OTP value will decrypt the seed, next time you want to access your data. THen you need to reencrypt the seed with again the next OTP value.
But I would recommend a lot of safeguards, because to many blank presses will give you a OTP value, which will not decrypt the seed anymore...