But as you said, yes any damage or being shaken awake automatically wakes them, and it only affects 25ish HP so will become ~irrelevant past level 3 or 4. In BG3, I've heard that enemies wake up after a few turns, indicating that they're probably (incorrectly) getting STs each turn to wake up.
Sleep last for 2 combat rounds, unless broken early. After that, enemies will wake up.
It gets ridiculous later on. Once you take out the Goblin bosses, two of which have half a dozen support characters in them, one of which has two but also a patroller minor boss who turns up at the worst time, but outside in the Goblin camp there are thirteen - 13! - Gobilns and something bears (sorry, can't remember their name), two of which are spellcasters with one-shot-prone spells, one Worg (minus the summons), and a Troll you have to fight.
If you consider that bad enough then try it with a spell caster who can only access a single rank 2 spell, falls asleep whenever sleep spells hit him, and can only use his ranked spells once in battle, along with melee characters that miss more than they hit. To make matters worse, it's impossible to sneak back in through the main entrance because a Goblin has line of sight covering the path you need to cross to get to the door, and despite searching all over, I couldn't find an alternative.
The encounter is not survivable with the available armour, the only way to do it is an extroinarily long, attractional battle on the bridge, or call in Troll support but given they cost 500 gold a battle, you won't be able to afford them for the three battles you ideally need them for. If your character had better gear, and the game had a viable spell casting system, and you hit more than you missed, you'd still struggle against those odds, and the game has none of that currently.
To speak to this from Jericho, this is why Larian added the option of bringing Halsin along with you to join your party as a temporary 5th, to help struggling players defeat the Goblin Stronghold with an overleveled character joining the party.
If you rescue Halsin first and bring him alongside you, the combat should be noticeably easier to manage. Halsin is level 5 with a good Wild Shape that normal players cannot access and lots of spell slots in Elven form.
