I'll preface this by saying that I think eBay's MBG policy and how it functions has some serious flaws, but that I also have always been happy to practice its basic premise (buyer receives their item, or gets a refund).

Some of those flaws certainly do concern packages either lost or delayed in transit, especially international items where customs clearance can take a long enough time beyond eBay's ETA for a buyer to open an INR even on a fully tracked package, gain a refund, and then receive the item some time after, so for me a "lost in transit" policy, has some merit in dealing with situations where a package is verifiably in transit, but has not yet been delivered.

But that's because ebay doesn't particularly care that an item was posted, they care if an item was delivered, and the surrounding circumstances as to why it's not delivered don't matter to them in the vast majority of cases. A tracking number alone will not win an eBay INR case, it has to show that the item was delivered. 

Let's take eBay out of the equation for a moment, and just focus on the relationship between a buyer and a seller. eg Say you were selling on your own website, you posted an item, and the buyer contacted you to say it was not delivered. What would you do? If you're the buyer instead, what would you like for the seller to do? 

If the package was tracked and let's assume they don't open a PayPal claim or anything like that, you could then lodge an equiry with Australia Post and seek compensation once the package is confirmed as lost, and if you receive compensation, you then pass it on to the buyer. This process, however, can't be started until at least 10 business days after positing (on regular mail), and usually takes a minimum of 30 days to complete, and from experience the compensation can then take about 2 weeks to arrive in the mail. That means your buyer then has to wait around two months from the date of purchase for a domestic item, before they are compensated...if they are compensated. Think about this objectively for a moment and honestly ask if that sounds like a reasonable business practice, and then also think about how an eBay policy that accounts for this scenario will actually work. 

If you didn't send the item they bought tracked and were not eligible to receive compensation, what would you tell the buyer, or what would your reaction be as a buyer if a seller you bought from told you that? In other words, putting all policies and legal obligations aside - what do you feel are your ethical obligations as a seller, and do they align with how you would like to be treated as a buyer?