The first fleet came on another day. The date was changed to Jan 26 so it can be in the summerIt celebrates the day the First Fleet came to Australia and put the Australian flag down. Also a shit ton of Aboriginal's were killed that day.
You are right, NSW (Sydney) had always dominated the national politics and Australia Day celebrations with its medals rewarding day like, 'The Australian of the Year' was organised and awarded by the NSW State government and other States led by Victoria (Melbourne) boycotted celebrating 'Australia Day' the same day as NSW. Other States intermittently celebrated different dates. This lasted till the early 1990's when a national body was created to organise and the announcements and rewarding of 'the Australian of the year' rotated among the States and territories. It is only Two decades ago when all of Australia celebrated Australia Day on the same day. Australia's capital city Canberra was born over a feud between Victoria and NSW which both insisted to permanently hosting the Capital. Yes, it is a recent phenomenon which was exacerbated when John Howard came to power. He was big on nationalism and revised history and singlehandedly managed to turn Australia's world war 1 participation into a national holiday day. He convinced Aussies that Aussie soldiers who fought in Turkey should be celebrated as heroes in a national heroic Day called ANZAC Day. These poor soldiers were used as a cannon fodder by the Brits where 10,000's of them lost their lives. Nationalism requires symbols, myths and distortion of history. We now have Anzac Day and proudly celebrate as a symbol of the "courage" of our soldiers.I heard people only started to celebrate the holiday recently and only Sydneysiders were celebrating it at first.