Australia is a nation of car drivers and in our day to day lives, we'd rather jump in the car to get from A to B ahead of any other mode of transport available. This in part is because of the small populations in many regional areas and the high cost of building transport infrastructure there. Road is often the only means of access to such places, therefore to get there you have to either go by coach (if the locality is on a major transport route) or drive there in your own (or hired) vehicle.
After cars, buses (coaches) are generally the next cheapest form of transport. Buses are the first choice of backpackers, their support has ensured bus services on major routes are plentious. Air and rail are not far behind - air can at times be the cheapest form of travel when discounted fares are on offer, but remember that advertised discount fares often only include carry-on baggage and you will be charged extra for stored luggage, as well as to nominate a specific seat and to pay by credit card (try buying your tickets with cash and you will be politely refused!). By the time these extras are added, your budget fare may not be much cheaper than the regular fares of another airline flying the same route and offering a greater choice of flights.
Rail services of late have improved on what they used to be, particulary in regional Victoria, New South Wales and Queensland. Services are frequent and the cost is very reasonable. The regional areas of Australia, though often reglected by both interstate and overseas travellers, have much to offer the visitor and are easily accessed and well serviced by trains.
Because of both distance and the limited number of travellers utilising these services, some long distance rail services, like The Ghan to the Northern Territory, and the Indian Pacific (east to west) run only once or twice weekly, depending on the season. Care must therefore be taken in planning, so that you are not left wasting valuable time at a place you don't want to be, waiting for a connection.