It is a shame that onions cannot resist weeds a little better than they do. However, that "fit in anywhere" characteristic makes them good neighbors for vegetables. There once again, they will lose out in competition and not develop well if you don't clear out all the salad greens, or whatever the onions share space with before they crowd the onions too much.
Closer than 5" is possible if the young bulb onions are used as scallions. I don't think it would work well to set them out as bunches. They may well just look like chives or shallots at the end of the season.
I have direct-sown shallot seed with good success. I had grown shallots from saved sets for about 20 years before I ever saw a shallot seed. I like shallots
. They make fairly good scallions when they are young but the valuable bulbs are being sacrificed if you do that. I feel like I really have something special with shallots in the garden and kitchen.
Bunching onions are grown about the same as bulb onions and can be very useful. Remember to pay attention to your location's daylength when choosing bulb onion varieties.
Sowing seed in February in an unheated greenhouse works fairly well for me. Yes, I will have larger bulbs if I order the plants from Texas but there isn't a great deal of difference. Onion like a fertile soil and the lack of plant nutrients, especially nitrogen, will do a lot more to retard growth than what size the plants are when they are set out.
Setting out tiny onion plants in the early weeks of the season can be tedious. Think of it this way, you are gonna have lots and LOTS of onions in a small space even if you can't get beyond that small space with an exhausting amount of transplanting. Sit on a stool. Take your time. Remember they like good, well-prepared soil.
The best thing I found to get through the transplanting quicker was using my index and middle finger for planting. It's a little unnatural to pick up a seedlings between those two finger and not use the thumb for anything but, try it! The soil is soft and raked smooth. You just "scratch" the little onion plant into place. At some point as you are pulling your 2 fingers through the soil, you release the plant. Then, you can "bump" it back upright before picking up another onion plant. Scratch it in, bump it so it stands upright. Move on ... 5 or 6 inches ... or, closer.
We are each other's harvest; we are each other's business; we are each other's magnitude and bond. ~ Gwendolyn Brooks