All modes of SGL8022W are toggle mode, ie every time you need a touch to switch off or on.
Is there a way to make it into a momentary switch, where default is off and on touch it fades in and it fades out when touch is removed?
That IC only has a limited range of options, that are fixed settings.
Hypothetically, an external circuit could be added so if the light was on at all, it simulated a continuous touch input so it ramped up & down until it got back to zero and the extra circuit shut off.
Without knowing the exact sense system used in that IC (its not in the data sheet) I cannot suggest a circuit.
The SGL8022W appears to be designed to control an LED, On and Off and varying brightness.
I don't think that can be used as a momentary switch.
However, the SGL8022K is a two channel touch switch.
Reading the datasheet with the help of Google Translate (the datasheet I found is written in Chinese, I do not speak Chinese), it seems that the SGL8022K will work as you require.
The SGL8022W appears to be designed to control an LED, On and Off and varying brightness.
I don't think that can be used as a momentary switch.
However, the SGL8022K is a two channel touch switch.
Reading the datasheet with the help of Google Translate (the datasheet I found is written in Chinese, I do not speak Chinese), it seems that the SGL8022K will work as you require.