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There are many reasons why Sydney is highly populated. One of the reasons behind this is that there are significant amount of employment opportunities which is especially appealing to individuals wishes to seek out a broader range of career opportunities than what they can get from elsewhere, such as the Illawarra region, which has unfortunately suffered one of the state's highest unemployment rates, hence those unemployed seeking employment generally find more opportunities for a career in Sydney.
Sydney is also the Capital of NSW and hence generally Capital cities would have a higher population. Sydney is heavily rich in cultural variation, provides attractive features that appeal to tourists, etc.
Sydney is a tourist attraction and also has many employment opportunities that individuals seek out, including those from different regions such as Wollongong who decide to travel to Sydney for work since Wollongong tends to lack in employment opportunities for various occupational areas.
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