I understand the master is suppose to be a library of your extensions. Isn't it suppose to also store the users and the content? When a new user registers it is stored in all my slaves but not the master, also if I create a group in Jomsocial, it is stored in all my slaves but not the master.

Theorically you should not store any content into the master.
This avoid to create slave site with default content.

If you want to create a website to store the user information, create a specific slave site for that.

If you physically store content into the master website, this mean that you will have this content into any slave site that you will build based on this master.

See the tutorial video 16 that show how to share the content between the website and in particular how to share the users between the websites.
www.jms2win.com/en/tutorial#jms12x-16