How can Dr. Strange rewind time in these circumstances? [duplicate]

Yes, Strange set up the "time loop" as soon as he entered Dormammu's domain, effectively locking himself and Dormammu into it. This appears to work only because time, as we understand it, doesn't exist in Dormammu's domain, so Strange can effectively bring it with him from our world, an manipulate it however he sees fit, without any of the usual consequences of doing so.

You can see when he first lands on the "planet", before confronting Dormammu directly, he checks his wrist and confirms that the spell effects from the Eye are active. Based on what he tells Dormammu, he has just set up a closed time loop -- something Mordo warned him might happen if he misused the Eye.

Once this closed loop is active, only Strange can break it, by undoing it with the Eye. So, every time Dormammu kills him, and the spell "ends", all that does is close the loop, and the little bubble of time that Strange has brought with him cycles back around to the beginning again.