Known issue, and why my Demon/Storm is on the bench
As stated, It has always worked this way.
The way I get around it on my Thugs MM is that I have "Bruiser: Goto" mapped to Shift+LButton so I can just shift and click to reposition him. If you manually move melee pets into range of a knocked down enemy, it will start attacking them while they're still on the ground.
Unfortunately, it only works for Thugs because the Bruiser is the only Melee. It's not really a good solution for a set that's entirely melee (IE: Ninja's and Beast Mastery).
It seems that MM pets don't get an update on the actual position of foes that have been knocked back untill they are starting to get up again. I have built a Beastmastery/Storm Summoning MM and as soon as I start doing knockback the damage output of my pets goes way down. The pets run to the position where the foe had been before the knockback and then stay there untill their target starts to get up again. Only then do they close into melee range and start attacking again. The only exception is the ranged attack of the dire wolf, which will fire if the target is still in range for that. Of course a little loss of damage output from the pets is to be expected, since they need to run to the new position of their target, but the time they sit there doing nothing (or probably rather smashing their attack keys, screaming "Why does it say 'Out of range'? It's right in front of me!") is several times longer than the time they spend closing in, and most foes should be dead before they even start getting up if things worked correctly. On foes that get stuck in the prone position there is no way to get the pets to close in on that target. The only way to deal with those is either killing those foes yourself or to knock them back to where they were before the first knockback.
I have noticed that robot pets may have the same issue but there it is difficult to reproduce since they are mostly ranged and foes only rarely get knocked out of their weapons range. Also there you can lead the robots to a position that is in weapons range of both the old and the new position of the foe and they will attack again.
But the Beast/Storm MM is really broken by this issue. You can either do knockback or have pretty decent pet damage - but not both. This is really sad because this could be a really fun build - with the added benefit of freaking out Fire/Fire Tanks ;-P