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We have a limited number of players for our tournaments, and I am trying to get some information on how they are doing well?

Probably because all their units are immune to psych, cause fear, and can't be run down, combined with broken special chars and awesome lords/heros.

They can make your leadership -3-5 and you can't stop it. With a spell they can make you -3 more with doom and darkness, turn you stupid or blast you with infinite str 5 hits. Tzeentch can pick spells, gets a ton of power & dispel dice and 4+ ward. They duplicate 'magic' items that aren't magic so they can't be destroyed. Nurgle are just tough, fleshounds & flamers are too good for the points and a bloodthirster will beat up just about anything in a fight.

I use a pretty tame nurgle list and still feel really dirty when my army should die or the tally reaches the magic number.

Ahh, daemons...
1)Excellent special rules for starters
2)Downright broken and severely undercosted special characters (other armies may have like 1 of these, but daemons have 4+)
3)Excellent selection of characters but what really makes them ott are the daemonic gifts, some of which are _so_ undercosted and/or broken, it's not even funny. And on top of that you get to take multiples in the army and bsb can have (awesome) magic banner + gifts too. And on top of that the gifts aren't even magical items per say so you can't nullify them with certain spells etc...
4)The possibility to take good magical offensive and decent magical defense by taking _just_ some core troops (horrors). No need to take 'em wizards at all, and if you do take them... The possibilty of awesome magic phase with horror units + wizard characters.
5)Cheap core flyers that are daemons. Need I say more. At least the DE harpies can be panicked.
6)Flesh Hounds/Flamers that for some bizarre reason have 2w each which makes them most undercosted units in the warhammer world hence they're pretty damn good. Hence you can pretty much skip the other daemon specials & rares (apart from a lone fiend or so) which is silly.

I seriously hope that Mat Ward(save) doesn't desing another army book in his life. Or that he designs all of them instead. 'Cos this way it sure as hell won't work.

Plague bearers + a herald with slime trail is possibly the most frustrating core unit in the game. Unless you have flamming attacks, then they're only mildly annoying. Ward saves, regeneration, poisoned attacks and no flank or rear (for combat res) makes me a sad panda.

In short, as others have indicated, tactics have nothing to do with it.
Undercosted and overpowered army selections and magical 'items' make them top tier.

Don't Break or Panic=Top Tier.
Do Break and Panic=Bottom Tier.
Can do something about Break and Panic=Middle Tier.

I guess that has pretty much said it the best.

Are there any drawbacks in the Daemon army book at all? Most armies have their strengths balanced by some sort of significant weakness but I haven't seen anything like that in the Daemons army book.

I don't agree at all that most armies have significant weaknesses. VC, Daemons and Dark Elves don't have any weaknesses to mention, they just have different types of strengths. Daemons might seem they are the hardest to play against, but take my GT Daemon army and play pitched battle against DE with 50 rxb and two RBTs backed up by some counter punch and heroes and it's you who will be sweating all game and not the opponent.

I agree that Daemons don't have a weakness, that was my point. I don't know enough about the new DE but I do believe that VC have weaknesses, namely reliance on magic and the fact that the army starts to crumble if the general is killed.

deamons are weak against decent shooting opponents with combat blocks.
All but a few spesific units will go down hard to str 4 shooting such as crossbows or repeater bolt throwers.
Hell, even repeater crossbows/long bows will make them sweat.

How many power armies out there use such items? very very few (vamps/deamons have virtually no shooting, lizards focus most on magic, and DE focus on more combat power).

Every army has a weak point, you just have to find it and exploit it. The obvious problem is that vamps cannot exploit this weakness, and their major weakness is that their troops are overpriced against units that are immune to psych (daemons) so the vampires that were ridiculously overpowered previously are now loosing to the newcomer (though at this point it isnt really a newcomer anymore).

My dwarves could beat them. If they were painted.