A reason commonly given for protecting the government of a state is that this prevents the people of that state being oppressed by the people of other states. This would make a lot of sense if the people of Australian states had different religions or something. But realistically the people of any Australian state are pretty much like the people of any other. It's hard to imagine why any group would want to oppress a people essentially indistinguishable from themselves. If the state borders helped to protect the country from the city, or the poor from the rich, or vice versa, that might be helpful. But they don't.

Constitutional protection creates a barrier to change. The national leader can't ram through reforms nearly as easily if sub-unit governments are unccoperative. This could be good or bad, depending on what you think of the reforms. In the long term it sems to have been bad for Australia. The really ugly thing about this is the bluntness of the mechanism. It isn't carefully tailored to provide a particular level of obstacle. Rather, the obstacle is very effective when the field of government involved lies on the boundary of two areas of responsibility, and ineffective otherwise. So it's effective only in situations that represent in themselves a failure of the federal system (since the demarcation lines were chosen originally to minimise clashes).

The usual way to settle a demarcation dispute is through a referee. Constitutional protection makes the referee much less powerful.

Constitutional protection also means the regions can't be micromanaged by the central government. That means if the region has a particular policy the central government dislikes there isn't (as?) much the central government can do about it. Such policies might include harmful competition. It could also include beneficial competition.

In principle there's no connection between constitutional protection and decentralisation. We could have an all-powerful central government that chooses to devolve power to the periphery. Human nature might, however, make this unlikely. Human beings find it hard to stop themselves sticking their oar in, expressing their belief that they can do a job better than the person whose responsibility it is. If this were not true, this presentation might never have been written.