gamestages.xml example has strange math, doesn't make sense with information given

Yup! That documentation is out-of-date. Here is the new version for your reference.
 

This is how the game stage (GS) of a PARTY is calculated:

The GS of all players in the party are calculated.
The players are sorted by GS.
The highest GS number is multiplied by "startingWeight".
This then loops down the list and "startingWeight" is multiplied by "diminishingReturns" every time.
The final result is then converted to an INT that rounds down.

Example:
Players with GS 120, 30, 60, 91, 5, 1, 2, 80
startingWeight= 1, diminishingReturns=0.5 (defined in this xml file below)

So we get
120 * 1.0000000 = 204
 91 * 0.5000000 = 45.5
 80 * 0.2500000 = 20
 60 * 0.1250000 = 7.5
 30 * 0.0625000 = 1.875
  5 * 0.0312500 = 0.15625
  2 * 0.0156250 = 0.03125
  1 * 0.0078125 = 0.0078125

...for a total of 279.0703125 which is then rounded down to a GS of 279

 

The first line of the calculation should = 120, so the total gamestage should really be 195.

8 hours ago, jdifran said:

The first line of the calculation should = 120, so the total gamestage should really be 195.

HA! Dang it! I used 204 as the GS in the spreadsheet that used to check this. Will fix! Thanks!

This is a clever mechanism with a limit of 2x the highest GS (if all players had the same GS).  By setting diminishingReturns=0.0 it would make the GS equal to the highest GS regardless of the number of players.

 

I mention it because some folks on our multiplayer server don't like that group hordes are significantly harder than solo hordes (not just in numbers, but in the types of zombies that show up).  Setting diminishingReturns=0.0 would fix that.