If you're not facing anything, it seems that Dalu will sleep everything engaged with you.

You assess your combat situation...

A juvenile wyvern (1: unconscious and very badly balanced) is flanking you at melee range.
A juvenile wyvern (2: unconscious and very badly balanced) is behind you at melee range.
A juvenile wyvern (3: unconscious and very badly balanced) is behind you at melee range.

Dalu's sleep effect isn't supposed to be AoE; it's supposed to only hit the foe we're facing. The stat debuff is still AoE, though.

AEWO is also facing only. Ricinus posted about how he thinks AOE, continuous CC is problematic, hence the sleep effect being single target. And for the most part, that's working correctly. If you're facing a target, only that target will get slept. It's just when you're not facing anything that it turns into AOE.