Whether "Japan" is multicultural or not depends on which "Japan" you are talking about. As an historian of modern Japan, the only "real Japan" for me is Dai-Nippon Teikoku. It was, by definition, structure and policy multicultural. The fact that great efforts were made to Japanize parts of the empire is testimony to the multicultural nature of "Japan." Had it been monocultural, no such efforts would have been needed.

Moreover, the "client state" of Manchukuo was explicitly multicultural. Although not formally a part of Dai-Nippon Teikoku it was de facto a part of "Japan"
and officially multicultural.

Historically, the notion of a monocultural Japan is of recent, largely postwar vintage. The "one hundred million hearts beating as one" slogan of Dai-Nippon Teikoku required the inclusion of Chinese, Koreans, and others to bring the total close to one hundred million.
This too points to the multicultural character of the "real Japan."

On related note, can anyone explain the recent popularity of the pronunciation Nippon rather than Nihon? I, of course, prefer this pronunciation but only when it is part of Dai-Nippon Teikoku.

EHK