I'm guessing it's onion juice. Maybe the fresher onions are more likely to leak its juices when cut. The old ones dry out in storage.

Doesn't that mean it's actually FRESH?

yeah, thanks, i've cut an onion before but it's never been milky, always clear liquid.
thanks for the comments.

Thank you for asking this! I have always wondered what that fluid was when I have cut into onions or shallots!

I've wondered, too! Especially since I once had really juicy onions that made a *terrible* onion soup (milky broth that I just couldn't fix).

If it smells a little off, is damp and soft, or the layers stick together -- it's gone off. If it is crisp and smells nice and bright and oniony, it's fine.

Fluid? Gross word for this. It's onion juice. Move on.

I always take that as a sign of freshness, aka still watery and not dried out yet!

Ha--though I second @Purdygirl--let's call it juice--or onion water!! :)