I have created a slave site called "onboard".

When I go into FTP I see /multisites/onboard and all is well. Another instance of Joomla and everything functions as it should.

But then that directory has a multisites folder, which has an onboard folder.'

But then that directory has a multisites folder, which has an onboard folder.

But then that directory has a multisites folder, which has an onboard folder.

But then that directory has a multisites folder, which has an onboard folder.

and on and on.

Is that normal?

YES this is totally normal.

The multisites folders is a symbolic link that refers to the master multisites directory.
When the slave site is defined as a subdirectory of the master websites (like in the tutorial video), this create an infinite loop because the "multisites" subdirectory is in fact a parent (master) "multisites" directory.

This one of the particularity of the symbolic link that allow declare a parent as a child.
So if your child is in fact your parent, they will have "you" as child and of course you also have your parent as child. This produce an infinite loop.

This does not seem correct. It creates an endless directory structure. when I try import my site into eclispe using FTP, it gets caught in an endless loop receiving the directory list.

Is there a way to create slave sites so that this doesnt happen or is it necessary to utilize the symbolic link

This is TOTALLY NORMAL.
This is just symbolic link recursive loop when you create inside a subdirectory a reference to the parent.

As explain above, you just have to deploy slave site in "brother" directory of your master and this will avoid the loop.
If you create a slave site under the master and the you make reference on the master in a subdirectory, this create the NORMAL infinite loop.
This is a "virtual" infinite loop as it is resulting of a Symbolic Link that does not consume disk space and make reference to the parent.

You can also exclude directories in the template setup. Then the slave sites do not have the endless directory recursion. Experiment with this.