Working as intended and a better system than the alternative, imho, otherwise indirect flights would possibly be even more expensive as they would have to factor in the value of the additional status credits.
You might find the calculator here useful for pre-calculating or checking SC award rates:
Earning Status Credits | Velocity Frequent Flyer
Note this is different to how it works when travelling internationally where each sector, even between domestic ports en route to an international port, will generate SCs based on the distance between said ports and the ticket class being flown.
For example BNE->AUH (Brisbane to Abu Dhabi) in the lowest economy class would generate 40SCs, but if the routing worked out as BNE->SYD->AUH, the ticket would generate (10 + 40) 50SCs. Ditto when flying between ports in a country. For example, a flight ticketed from Brisbane to New York routed BNE->SYD->LAX->JFK would generate SCs for each of the three sectors.
Also note that it works differently also for complimentary flights redeemed with the VirginMoney Flyer visa credit card, where each individual sector taken domestically count as redeemed free flights.
Complex when first considered but actually very simple.