Nothing's actually changed, eBay had no concept of letter post whatsoever until the untracked letter option was added. The only update eBay did was replace the long-deprecated Parcel + Tracking/Signature options with untracked and tracked letters. Australia Post stopped offering untracked parcels about a decade ago but eBay left the useless options in the list for years on end.

Up until last year, "Standard Delivery" was generally used for untracked letters due to being no actual option for letter rate items, but with the update eBay renamed it to "Standard Parcel Delivery", implying that all Australian parcels always come with tracking.

Even before the change you were a sitting duck when it came to cheap items with $2 or $2.20 postage (and before tracked letters became a thing, Registered Post was around $6 or $7, which wasn't much cheaper than the $8.95 parcel rate, and half the time registered items weren't even scanned by the posties and because of COVID-19 they weren't doing signatures either, so it was a waste of money).

If the difference between having "lower" search results in the most useless search option ever invented (Best Match), or having zero buyers because they don't want to pay upwards of $10 for a $2 item, I'll take the "risk" with lower-placed search results in the most useless search option ever invented while hoping buyers have brain cells and change the search option from Best Match to literally anything else.