Magnetization reversal in (Co/Pd) multilayers with perpendicular anisotropy for different numbers of bilayers (N) is investigated experimentally and by theoretical modeling. The focus of this study is on the magnetostatic energy in these structures and its effect on the magnetization reversal behavior and the nature of domain formation. For (Co/Pd) multilayers with small N , sharp magnetization switching and large domains were observed. In contrast, (Co/Pd) multilayers with a large N have long tail in the hysteresis loop that gets more pronounced as N increases. The size of domains becomes considerably smaller as N increases. Based on theoretical modeling that takes into account of the magnetostatic energy from the different magnetic layers, the domain size dependence on the number of bilayers is explained. For large N , the tail in the hysteresis loop is revealed to be the result of an increase in the magnetostatic energy, which at the same time leads to a drastic reduction in domain width.