However (if I do understand the difference between these methods right), only one thread is always selected for further monitor acquisition.
That is not correct. o.notifyAll() wakes all of the threads that are blocked in o.wait() calls. The threads are only allowed to return from o.wait() one-by-one, but they each will get their turn.
Simply put, it depends on why your threads are waiting to be notified. Do you want to tell one of the waiting threads that something happened, or do you want to tell all of them at the same time?
In some cases, all waiting threads can take useful action once the wait finishes. An example would be a set of threads waiting for a certain task to finish; once the task has finished, all waiting threads can continue with their business. In such a case you would use notifyAll() to wake up all waiting threads at the same time.
Another case, for example mutually exclusive locking, only one of the waiting threads can do something useful after being notified (in this case acquire the lock). In such a case, you would rather use notify(). Properly implemented, you could use notifyAll() in this situation as well, but you would unnecessarily wake threads that can't do anything anyway.
In many cases, the code to await a condition will be written as a loop:
synchronized(o) {
while (! IsConditionTrue()) {
o.wait();
}
DoSomethingThatOnlyMakesSenseWhenConditionIsTrue_and_MaybeMakeConditionFalseAgain();
}
That way, if an o.notifyAll() call wakes more than one waiting thread, and the first one to return from the o.wait() makes leaves the condition in the false state, then the other threads that were awakened will go back to waiting.