Australia has a total of 43 university and 132 higher education institutions which provide a combination of higher education and vocational education (12 of these higher education institutions can self-accredit). So you can see, Studying in Australia is a big thing and Australia is a very educated country. See the National Territory Education Standards Quality Authority which is held accountable by various Commonwealth Government departments and ultimately, Australian Parliament.

Further, according to the Australian Skills Quality Authority, there are more than 4000 colleges which can award coursework of up to Advanced Diploma / Associate Degree level (not all can award up to that level, but many are Cricos registered).

Australian Education Standards
Australian Education Standards

So.. What are the differences between University and colleges in Australia?

Universities more or less govern their own education affairs because they are deemed to be educating for the benefit (generally) of the community and are capable of governing their own affairs. Further, universities focus on research and not just teaching. Whereas colleges in Australia are for-profit institutions and have a vested interest in maximising enrolments without producing any research. Basically, colleges burn and churn and universities produce intelectual works in addition to burning and churning.