Concering the problem of the templates directory that may be hardcoded by some author is not the directory itself but the configuration of the hosting server.
You must provide in your hosting server the document root = to the place where you deploy the slave site.
Both solution propose herebefore are OK if you configure your hosting server correctly.
Q1) suppose you have a
www.site1.com
in your hosting server (apache, godaddy, plesk, cpanel, ...) you have to assign the document root = /public_html/master/multisites/site1
Q2) Idem with the path you have decided
document root = /public_html/sites/site1
As you can see, you have to provide in JMS the deploy folder = the document root you have choose in your hosting server.
This is only true when you want to have specific directory for each domain or sub-domain.
So in summary, you have to first consider the path you have associated to your domain in your hosting server and after see the sub-directories as relative to this "document root".
I suggest that you review the JMS concept described in the video of tutorial step 0.
This will explain you the relationship between the hosting server and the document root.