Those solar and wind farms are treated as generation facilities: they are hooked up to the grid in the same way that the "traditional" coal, gas, oil, hydro, etc. plants are. The transmission lines from those farms are designed to carry the electricity from them to the electricity customers, in a way that the transmission lines in residential areas are not.
The whole system is built on the assumption of a one-way flow of electricity: from centralised generators to customers. Rooftop solar breaks that assumption. Solar farms and wind turbines don't.
I'm not saying that rooftop solar isn't a good way to generate electricity. I am only saying that the grid, as it is currently designed and built, cannot handle the distribution of power from those rooftops to areas where it is needed when there is a significant surplus of rooftop power. The grid can - and should - be reconfigured to handle that distribution. But that will take time and money; until it is done, rooftop solar will be inherently limited in the amount of power it can provide to our society as a whole.
As for the comment about grid instability, that's a separate problem, pretty much completely orthogonal to the problem of distribution of power from rooftop solar. Another aspect of the design of the grid is that it is built to match supply to demand. When you flick a switch to turn a light on (or your TV, or your oven, or...), that causes an infinitesimal drag on the grid that is reflected as a small dip in the grid frequency (nominally 50 Hz.) That small dip is a signal to the generator companies to increase their supply a bit. When you flick that switch to turn the light off, it releases that drag and the grid frequency rises slightly, which acts as a signal to reduce supply.
The Kiewa Hydroelectric Scheme in Victoria has a capacity of just 381 MW; together with Eildon (150 MW), Rubicon (13 MW), and Dartmouth (180 MW), there's a total of 724 MW of hydro power compared with 4.7 GW of coal fired power from Yallourn and Loy Yang. But that 724 MW is critical to the balanced operation of the grid, because it can be spun up and down very quickly in response to those dips and surges in demand. Other generators that are slower to respond can then be adjusted as necessary.
Solar and wind, as you say, are effectively uncontrolled sources of electricity; they can be modeled by the grid operator as "negative demand". Too much of that unbalances the grid; the usual response is to throttle or dump the excess. That's where battery and other energy storage comes into play: those can be modeled by the grid operator as "negative supply" (to soak up the excess negative demand).
All of these issues can be solved. It's a matter of recognising the problems, designing solutions (bidirectional flow to/from residential areas, storage, etc.), and implementing them. The work is being done. It simply takes time, and we need to be cognisant of what we can do right now with the limitations we have in place from the historical assumptions that no longer apply, versus what we need to build towards based upon our new understanding of what's required for renewables to take the load from fossil fuels.
TL;DR: you aren't exactly wrong in your aspirations. But the systems we have in place right now can't handle that end goal. We have to work towards it, and build the systems necessary for it to work. I am not an electrical engineer (I did do a couple of years of that discipline, but didn't finish the degree), so my best guess is just that - a guess - but I'd say we're probably ten to twenty years away from reaching that goal, assuming the political will to do the work. Solar and wind farms are an easier solution in the short term because they fit in (at least from an energy flow perspective) with the assumptions made when the grid was first built. Battery systems near those farms help shift the solar and wind farms from "negative demand" designs to something that more closely resembles the assumption of supply being adjusted to meet demand, and hence further fit in with the old assumptions (and hence require less re-jigging of the current system to make them work.)
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