The effect chains are processed with a queue. When effects are triggered, they are first queued, and they resolve in the order they were triggered.
Last Words > Passive Effects , Fanfare > Passive Effects
"Deal damage to all" is actually processed with an order, from turn player to non player, from left to right.
Effects like Bone Bug's require the original follower to remain on board when effects resolve.
So, in this case,
[Demonic Storm] resolves
deal damage to both faces
[Jorm] effect is queued
[Ram] effect is queued
damage to Ram
damage to King
damage to Bard
damage to Corpse, killing him and [Corpse] and [Bug] is queued
damage to Bug
damage to Khawy, killing him and [Khawy] and [Bug] is queued
damage to Chimera, killing him and [Chimera] and [Bug] is queued
After this, the queue is [Jorm,Ram,Corpse,Bug,Khawy,Bug,Chimera,Bug] , so it's going to resolve in that order:
[Jorm] resolves
[Ram] resolves, because Ram is still alive
[Corpose] resolves, (let's say) killing Ram
[Bug] resolves, because Bug is still alive
[Khawy] resolves, killing Bard, [Bard] is queued
[Bug] resolves, because Bug is still alive
[Chimera] resolves
[Bug] resolves, because Bug is still alive
After this, the queue is [Bard]
After this, the queue is [King]
I think this is what happens, sorry if I'm wrong! Note that if Bug is killed during the chain and isn't on board when the effect resolves, it won't activate.