It also fires on the sublist because you don't specify which ul
it should start from. The sublist has the same structure, so also qualifies for the selector.
To fix this, add the main lists parent element to the selector, so:
$(document).ready(function(){
$("div#master").on("click", ">ul>li>div", function (){
alert($(this).text());
});
});
Fiddle: http://jsfiddle.net/kQH4x/6/