Yes, I see lots of Sydney, Melbourne etc. in addresses and it's very odd because surely Australians know not to do this?

I think at one time you could put whatever you liked for your location that appears on an item page (rather than eBay generating it from your postcode, which may or may not be how it currently works). So sellers might have done that in order to show a more generic location. Maybe it's a holdover from that time.