There's more to SMT than bonk the demon to progress. The moon phases act as a way to tell the time. However it also plays a role in what demons will appear where in certain areas as well as if a side quest or important event will occur. When you negotiate with demons be aware that savestates are a necessity because they might not join you right away. Another thing is that the moon phases also act as a way of knowing when you can talk to demons. If memory serves, even if a demon normally can be recruited, if the moon phase is on a new moon, they will always be aggressive and cannot be recruited no matter what you do. If it is a new moon, always fight the demons you encounter if you feel you need the levels. There is no way of knowing when you should grind and how much levels you will need but side quests will be shoved down you're throat a lot so be sure to do them when they appear and always make sure you have the best equipment you possibly can have even if it means farming a demon for a weapon or armor drop.
