A "step dynamics" model is developed for mound formation during multilayer homoepitaxy. Downward funneling of atoms deposited at step edges is incorporated and controls mound slope selection. Behavior of the selected slope differs from that predicted by phenomenological continuum treatments where the lateral mass current vanishes identically. Instead, this current is shown to vary periodically and vanish only on average. An exact coarse-grained continuum formulation with appropriate boundary conditions is derived and recovers step dynamics results.