Originally Posted by
Calchas
There are different security standards on international and domestic flights, as there are in Japan. In particular liquids are permitted on domestic flights but not international.
That still does not explain why would this affect terminals built before any liquid rules or similar silliness were introduced, and why you don't have just security in between domestic and international. That's certainly more efficient than having bus/train and then security (okay, it could mean one less security but anyway...).
I am guessing it was simply due to the fact that not many pax were actually leaving the country and hence no need for easy transfers. SYD actually plans to consolidate the domestic and international traffic according to its Master plan 2033.