Welcome on board piggienisum!
Multicrit denotes the maximum amount of crits that can be done in one hit.
You can see the amount of crits done in the hit by the amount of excalamtion marks in the crit notification.
For instance, “120!” is just a normal crit, “360!!!” would be a 3x crit.
So after a successful crit it is re-rolled if another crit is done until the multicrit count is reached or the crit roll failed.
So multicrit and crit chance go hand in hand.

Do the later crit rolls have a chance reduction? I'm wondering why a tower with 100% or more crit doesn't hit for max multicrit count.

Yes, during the multicrit calculation, after each successful crit for a strike, the chance for the next crit is 0.8 * critchance. That's why >100% crit chance makes sense with enough multicrit :-)

Hmmmm, so what you are saying is that if I have a tower with a multi crit of 4, and a crit chance of 400%, would the values go as follows?:
crit 1 = 100% chance (400%)
crit 1+1= 100% chance (400%x.8=320%)
crit 1+1+1(+2)=100% chance (320%x.8=256%)
crit 1+1+1+1(+3)=100% chance (256%x.8=204.8%)
crit 1+1+1+1+1(+4)= 100% chance (204.8%x.8=163%)?
This math may be wrong if you are not deducting the difference in value, but also, even if this is correct, it does not seem to play out sometimes. I like the frozen heart maxing strat + excal, but sometimes it seems like a waste even with like 600% crit chance?
*It is working with my holgar right now tho (3.5M +8 multi crits at the moment with 501% crit chance).

That is generally correct, although a multicrit of 4 will only let you crit 4 times (your calculations are for 5 crits).
Just for a reference, at +8 multicrit you only need ~477 crit chance to be guaranteed the full 8 crits (1/(.8^7) = 4.7683). Possibly some more/less depending on if the chance gets rounded at each step.
It's also worth mentioning that your effective total chance for a higher-level crit is lowered quite a bit if the chance for earlier crits is less than 100%, since the crits stop as soon as one roll fails.
For an example of that, if you have 100% crit chance at 5 multicrit, your chance for a 5x crit isn't 41% (1*(.8^4) = 0.4096), it's 11% (1 * .8 * .8^2 * .8^3 * .8^4 = 0.1073)