GO FOR IT, NEWBIE!!!

That makes sense.

If you use Gnolls to initiate a wait, and then attack, the demon should still take its turn.

There's a clear contradiction here. Example: Phoenixes attack Zombies (3 stacks each). In the first round, the Phoenixes attack, and their morale increases. They wait. The Zombies and the other Phoenixes also wait. After all the waits, the Phoenix with increased morale will go first, then all the Zombie stacks, and then the remaining Phoenixes. Something like that.