I didn't miss anything. Local law is simply one of the obstacles that can be easily overcome if someone wants to.
I don't know the law in Australia exactly, so I can't say exactly what solution a developer should look for.
For example, if in Australia there is a ban on making "loli" content public, the developer can ask someone from his community on Discord to share this patch instead.
If the law prohibits the creation of petit characters, the developer can simply start working in the Cloud to which he connects via VPN, or simply ask someone to render for him.
The law does not apply retroactively, but this post shared by the developer in which he compares old and new models, where these models are naked, was definitely made public after the new law was established in Australia (because it was a reaction to this law), so practically speaking, this post is already breaking the law.