I didnt want to mention any names but what you say is exactly correct. And they are cheaper.
Unfortunately, when the registry stuff became de-regulated Melbourne-IT didnt put enough effort into explaining it to us mere mortals. Most of us have better things to do (like run our business) than have a detailed understanding of domain name registries - we just want to pay our money and get back to work.
I am reasonably computer literate and have a good understanding of TCP/IP and DNS etc so how "SophiesFlowers.com.au" manages, I have no idea.
Anyway, everyone, heed what Allpha said.
BTW. I remember you posting about what happens if a company forgets to register .com. Check out www.i7.com.au (channel 7) and then www.i7.com