Sydney is linked to the towns and cities of New South Wales, and to those in other states, by a network of well signposted, well maintained sealed highways and major roads which allow for easy travel between localities. Larger cities are linked by highways that, in the main, bypass the smaller towns on the way, making the journey relatively uninterrupted. There are few parts of the state of interest to visitors that can't be reached in motoring comfort, although lesser roads, whilst sealed, do tend to be narrow.
In New South Wales, the speed limit on the open road is generally 110 kilometres per hour. A driver's licence from your home country or another Australian state will usually suffice for up to three months, as long as it has photo identification and it's for the same class of vehicle you intend to drive. If you're staying more than three months, you'll need to get a NSW drivers licence. Don't forget, in Australia we drive on the left hand side of the road.
Be aware that Australia is a big country, and the distances between Australia's states and territories and their capital cities are great. The closest capital to Sydney is Canberra, and it takes 3 hour to drive there. Brisbane and Melbourne are each a full day's away drive from Sydney, and the other capitals are even further. That said, there is plenty to see and do between capital cities, with the scenery changing constantly and lots of interesting things to see and do. Provided you allow enough time for both the drive, and to take in the sights along the way, there is no better way to see the Australia than by road.
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