setTimeout introducing delay in long running functions - node.js

Question

The code below executes a long running function (a sleep to keep it simple), then calls back itself again using a setTimeout. I am using nodejs 5.1.0
var start_time = Math.ceil(new Date() /1000)
function sleep(delay) {
var start = new Date().getTime();
while (new Date().getTime() < start + delay);
}
function iteration(){
console.log("sleeping at :", Math.ceil(new Date()/1000 - start_time));
sleep(10000); // sleep 10 secs
console.log("waking up at:", Math.ceil(new Date()/1000 - start_time));
setTimeout(iteration, 0);
}
iteration();
At the moment where setTimeout is called node is not doing anything (eventloop empty in theory?) so I expect that callback to be executed immediately. In other terms, I expect the program to sleep immediately after it wakes up.
However here is what happens:
>iteration();
sleeping at : 0
waking up at: 10
undefined
> sleeping at : 10 //Expected: Slept immediately after waking up
waking up at: 20
sleeping at : 30 //Not expected: Slept 10 secs after waking up
waking up at: 40
sleeping at : 50 //Not expected: Slept 10 secs after waking up
waking up at: 60
sleeping at : 70 //Not expected. Slept 10 secs after waking up
waking up at: 80
sleeping at : 90 //Not expected: Slept 10 secs after waking up
waking up at: 100
sleeping at : 110 //Not expected: Slept 10 secs after waking up
As you can see, the program sleeps immediately after it wakes up the first time (which is what I expect), but not after that. In fact, it waits exactly another 10 seconds between waking up and sleeping.
If I use setImmediate things work fine. Any idea what I am missing?
EDIT:
Notes:
1- In my real code, I have a complex long algorithm and not a simple sleep function. The code above just reproduces the problem in a simpler use case.
That means I can't use setTimeout(iteraton, 10000)
2- The reason why I use setTimeout with a delay of 0 is because my code blocks nodejs for so long that other smaller tasks get delayed. By doing a setTimeout, nodejs gets backs to the event loop to execute those small tasks before continuing to work on my main long running code
3- I completely understand that setInterval(function, 0) will run as soon as possible and not immediately after, however that does not explain why it runs with 10 seconds delay given that nodejs is not doing anything else
4- My code in Chrome runs without any problems. Nodejs bug?

Answer 1

First look at the node.js documenation:
It is important to note that your callback will probably not be called
in exactly delay milliseconds - Node.js makes no guarantees about the
exact timing of when the callback will fire, nor of the ordering
things will fire in. The callback will be called as close as possible
to the time specified.
To make your function more async you could make something like:
function iteration(callback){
console.log("sleeping at :", Math.ceil(new Date()/1000));
sleep(10000); // sleep 10 secs
console.log("waking up at:", Math.ceil(new Date()/1000));
return setTimeout(callback(iteration), 0);
}
iteration(iteration);
Next problem is your sleep function. You have a while loop blocking all your node.js processes to make something the setTimeout function of node.js does for you.
function sleep(delay) {
var start = new Date().getTime();
while (new Date().getTime() < start + delay);
}
That what happens now is that your sleep function is blocking the process. It is not only happening when you call the function directly it is also happening, when the scope of the function is initialised after the async call of setTimeout, by node.js.
And that is not a bug. It has to be like that, because inside your while loop could be something your iteration functions has to know. Specially when it is called after a setTimeout. So first the sleep function is checked and as soon as possible the function is called.
Edited answer after question change