My 3 family members are traveling from Berlin to Munich this summer, how far out of the way would it be to go via Prague?
Well, look onto a map. It is by far not "on the way". You need to invest a full day more to travel.
Berlin - 4:30h (train) - Munich
Berlin - 4:20h (train) - Prague - 5h (train and/or bus) - Munich
Prague is too good für a short stopover anyway. In this case Erfurt or Bamberg are better choices.
What mode of transport do you plan to use and how long do you plan to spend getting there?
It would be like going from SF to LA via Las Vegas.
If you are asking if it is feasible to go from Berlin to Munich and stopover in Prague for a few days, the answer is yes. But the rail line between Berlin and Munich has been upgraded and there is now limited stop ICE Sprinter service in just under 4 hours. The tracks between Berlin and Prague, and Prague and Munich are not suitable for fast trains, so it takes 4 1/2 hours from Berlin to Prague and 5 1/2 hours from Prague to Munich.