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'Continent' refers to the geographical arrangement of the land itself, and Australia is a continent because it is too large to be an island.

'Country' refers to the political organization of an area, and Australia happens to have one Australian central government. There are six states and two mainland territories which federated in 1901 to become the nation of Australia.

This is the classical definition however life is often more complicated than it should be. For example, Greenland, the world's largest island is not a continent of its own. This is probably due to population levels. Also, Australia is a continent in most places but in some parts of the world that continent is called Australasia or Oceania which is more inclusive of News Zealand and the Pacific Islands.

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