It isn't exactly standard, but you do hear this form As you say, the standard convention is 'eight hundred fifty'(US) or 'eight hundred and fifty' (UK). However, let's imagine that two tradespeople are bargaining about a price for something. In this situation, they probably would say 'eight fifty', because it is obvious in the context of their conversation that this means 850. There is no need for them to say 'hundred', especially if they are repeating a lot of numbers of a similar size. In situations where there might be cause for misunderstanding, you would use the full form, especially if 'eight fifty' might be understood as 'eight dollars fifty cents', for example. But if it is obvious what you mean, it is possible to miss out the 'hundred'. This goes for both US and UK English. If someone says 'How much did you pay for your smartphone?', a British person might answer simply 'Two fifty'. In this situation it would be clear to the listener that this means £250. The speaker couldn't possibly mean 'two fifty' in the sense of £2.50, because that would be too low a sum.

That sounds a little unusual to me - but would be easy to understand. It is very common to just say 'Eight fifty' - but that is obviously ambiguous, as it could mean either $850 or $8.50. If it is clear from the context what is meant, that is what people would often say. Perhaps whoever said your phrase added the 'dollars' afterwards, when they realised they were risking being unclear.

I normally say "eight hundred and fifty (dollars)". Most English speakers include the "and". "Eight fifty (dollars)" is a little confusing. When someone says "eight fifty", I think of eight dollars and fifty cents. If it's clear that the person is definitely talking about hundreds, then it's understandable. Without that context, it's simply unclear.