This regulation means is that, regardless of any by-laws that your building might have, noise between midnight and before 8 am is a no-no and could cost you a maximum fine of $5,500. It does NOT, however, give you permission to make noise the rest of the time, regardless of the by-laws of your building. It also regulates the environmental noise impact to surrounding neighbours from operation of building services, air-conditioners and the like.
Relevant NSW Legislation: Protection of the Environment Operations (Noise Control) Regulation (2008)
51 Musical instruments and sound equipment
(1) A person must not cause or permit any musical instrument or electrically amplified sound equipment to be used on residential premises in such a manner that it emits noise that can be heard within a habitable room in any other residential premises (regardless of whether any door or window to that room is open):
(a) before 8 am and after midnight on any Friday, Saturday or day immediately before a public holiday, or
(b) before 8 am and after 10 pm on any other day.