The very first step you must take when applying inclusion-exclusion is to identify your overlapping sets. Essentially, the main reason to use inclusion-exclusion is if you have a situation where it is difficult to count all the good passwords directly, so instead yo count all the bad passwords and then subtract these from the total possible passwords.
$$\text{good passwords}=\text{total passwords}-\text{bad passwords}$$
The total passwords of length 8 are easy to count
$$\text{total passwords}=\binom{42}{8}8!$$
unfortunately the bad passwords of length 8 are not disjoint which makes them harder to count. In other words: a bad password may be bad in multiple ways e.g. A bad password may have fewer than 2 letters and digits or just fewer than 2 letters and so on. In fact, these conditions on numbers of characters of each type naturally define the sets for inclusion-exclusion.
$$A_l=\text{the set of all passwords with }<2\text{ letters}\\A_d=\text{the set of all passwords with }<2\text{ digits}\\A_s=\text{the set of all passwords with }<2\text{ special characters}$$
We may imagine a Venn diagram with 3 sets

so that the total number of bad passwords is given by
$$\text{bad passwords}= |A_l|+|A_d|+|A_s|-\left(|A_l\cap A_d| +|A_l\cap A_s|+|A_d\cap A_s|\right)\\+|A_l\cap A_d\cap A_s|$$
Now we shall see how easy it is to calculate the cardinality of the sets and their intersections
$$|A_l|=\left(\binom{26}{0}\binom{16}{8}+\binom{26}{1}\binom{16}{7}\right)8!\\
|A_d|=\left(\binom{10}{0}\binom{32}{8}+\binom{10}{1}\binom{32}{7}\right)8!\\
|A_s|=\left(\binom{6}{0}\binom{36}{8}+\binom{26}{1}\binom{36}{7}\right)8!\\
|A_l\cap A_d|=\left(\binom{26}{1}\binom{10}{1}\binom{6}{6}\right)8!\\
|A_l\cap A_s|=\left(\binom{26}{0}\binom{6}{0}\binom{10}{8}+\binom{26}{1}\binom{6}{0}\binom{10}{7}+\binom{26}{0}\binom{6}{1}\binom{10}{7}+\binom{26}{1}\binom{6}{1}\binom{10}{6}\right)8!\\
|A_d\cap A_s|=\left(\binom{10}{0}\binom{6}{0}\binom{26}{8}+\binom{10}{1}\binom{6}{0}\binom{26}{7}+\binom{10}{0}\binom{6}{1}\binom{26}{7}+\binom{10}{1}\binom{6}{1}\binom{26}{6}\right)8!\\
|A_l\cap A_d\cap A_s|=0\\$$
The counts above are achieved by considering all combinations in which we may choose $<2$ of each type of character, clearly the intersection of all 3 sets is empty because there are no 8 character passwords with less than 2 of each of the 3 character types, at most such a password has 3 characters.
These terms may all be evaluated a plugged in to our first equation.