Honest question: what happens, if an Australian buys the game from GOG or another digital distributor? How could it not work?

Digital distributors are under obligation to take at least token measures to block the game from Australian IPs. The game won't appear in the Steam store, for example if you have an Australian IP address. GoG has done similar in the past with a few games, IIRC.

At any rate, this isn't hard to circumvent if necessary.

Only with Witcher 2. And it wasn't blocked; just a slightly censored version was offered in its place.

I doubt he will have any trouble playing it if he's managed to buy it. The question is what an Australian user has to do to be able to do so (in the worst case using a VPN, although that method would most definitely break GOG's user agreement). I guess there's also a chance that GOG will be selling the game to Australians until a court order specifically forces them not to (as it happened in case of The Witcher 2, AFAIK, only that one apparently got a censored version for Australians which most definitely won't happen with Hotline Miami 2), unless they've decided to play it safe since TW2.
Doesn't change the fact that they aren't allowed to sell the original version to Australians. And if there were no censored version Australians couldn't buy it at all.

They aren't or they weren't? I'm under impression that the restriction was lifted (along with the necessity to keep the game regionally-priced).

Reasonable. In the event that governmental interference prevents the game being sold, acquiring new fans can be just as important as the money would've been. It makes sense from both the artistic standpoint of a developer just wanting to get his baby out there, and a business standpoint of those fans becoming important down the line when/if the country reforms to allow adults to choose their own entertainment.

See, it turns out business and treating your consumers well are not incompatible, even though most AAA companies would prefer to burn their house down rather than take such an approach.

Don't know, if anything has changed I haven't heard about it.