Yes, it makes sense to talk about derivatives of functions $f:V\to W$, where $V$ and $W$ are a normed vector space, for example.
In this case, we say that $f$ is differentiable at $x\in V$ if there is a linear mapping $Df(x):V\to V$ such that
$ \lim_{h\to 0}\frac{\|f(x+h)-f(x)-Df(x)h\|}{\|h\|}=0 $
In your particular case, you could compute the derivative of $M\mapsto M^n$ by using a $n$-linear application given by $ \varphi(A_1,\ldots,A_n)=A_1\cdot\ldots\cdot A_n. $
You can show for any $X=(X_1,\ldots,X_n)\in M_n(R)\times\ldots\times M_n(R)$ ($n$-times) that
$ D\varphi(X)(H_1,\ldots,H_n)=\sum_{i=1}^n \varphi(X_1,\ldots,X_{i-1},H_i,X_{i+1},\ldots,X_n). $
So the formula you want should be interpreted as the derivative of $\varphi$ at $X=(M,\ldots,M)$ applied at $(Id,\ldots,Id)$. Which is equivalent to what we do when we write down this formula for real and complex functions.