How to host Etherpad (node.js) AND create a closed Wifi network from the same Mac?
Ah, it seems that the problem is that while "Internet Sharing" is ON, OSX does not instantiate the child connection (in your case, the WiFi network) until you actually get an internet connection on the parent connection.

You can potentially fool it with a loopback adapter on your ethernet connection (and perhaps static addressing and setting the router as itself), but I have not tried it.