does this need power connected to work?

Yes. The terminals on the left side connect to your power. The terminals on the right side are for adding more connectors. The terminals on top go to your track or they can go to your accessories.

Can the Atlas Connector be used with O-scale accessories?

Atlas Model Railroad Company makes 2 types of Electrical component connectors- #205 HO & N Connector is designed for 3 Amps usage or less (ie. lighting a model house, some lionel accesorries ) Atlas makes a #6927 HD Connector that is used for 10 amp usage (ie. Track blocking) You should check the Amperage requirements of the accessory that you want to control and then choose the component that meets that requirement. Thanks for the question!

Would this work with Bachman newer sets?

Yes, this switch will provide for off-on, and reversing options for three zones

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