Well, they might see different versions of characters from Undertale. For example, the RWBY characters could be really surprised by the unique battle mechanics in Undertale's AU multiverse. Maybe Ruby would be especially interested in the different types of weapons or magic used in that world.
One cool plot twist could be that in one of the multiverse scenarios, their enemies are actually their allies. This would completely turn their understanding of good and evil on its head and force them to reevaluate their relationships. It could lead to some really intense character development as they try to figure out what this means for their own world.
Ruby herself could have major revelations. Since she's the main character, seeing different versions of herself and different ways her story could have gone might make her question her own path and purpose.
Blake could also be a great character to focus on. Given her own complex backstory and her tendency to be more introspective, she might have deeper insights into the characters and situations in the Undertale AUs. She could form unique relationships with some of the more morally ambiguous characters in the Undertale multiverse.
If Naruto watches the multiverse fanfiction, he could gain new perspectives. Maybe he'd see how different choices in other 'Naruto - like' universes led to different outcomes. This could inspire him to think about his own choices in his world, and perhaps even consider alternative ways of doing things in his ninja career.
The fanfiction allows for new character interpretations. As mentioned before, different versions of Ruby can exist. This not only applies to Ruby but also to other characters like Blake and Yang. They can have different backstories and motivations, which in turn enriches the overall RWBY lore.
Well, he might get some really wild ideas. He could start imagining all the different versions of himself in other universes, like a Harry Potter who's a Slytherin instead of a Gryffindor. It would probably be both exciting and a bit confusing for him.
Well, one interesting plot could be the characters from Class 1 A finding themselves in alternate universes where their quirks are completely different. For example, Deku might be in a world where everyone has no quirks but still manages to be a hero through his wits and determination.
Another place to check is FanFiction.net. It has a large collection of fanfiction from different fandoms. Just type in 'fate watches multiverse' in the search bar, and it will show you any relevant stories that match your query. However, the quality may vary, so you'll need to read through a few to find the good ones.
One interesting story could be about Fate observing different versions of a hero's journey across the multiverse. For example, seeing how a character like Arthur Pendragon might have different fates in various multiverse scenarios, perhaps in one he's a tyrant and in another a great liberator.