I've been playing a monk and I have him half way through Nightmare, however I'm still a little confused about what exactly blinding does to an enemy. Some enemies seem to wander around aimlessly while blinded while some still keep attacking me. What does this status effect actually do?
Blind is a Control Impairing Effect in Diablo 3. Blinded enemies have a reduce chance to land hits and will not attack unless they are attacked first. Blind effects usually last a few seconds, depending on the Skill or Ability used.
I don't know how much this reference is reliable, but it agrees with your (and mine) observation.
Also, notice that elite monsters subjected to Blinding Flash recover quickly even if they
suffer a 30% chance to miss with attacks.
What I infer is that, elite monster can target you again in less than Blinding Flash's 3-second duration (even if you don't attack them), but the miss chance stays on for the entire skill duration.