The way the votes are counted in Australia, and especially how preferences are distributed, is more than a little confusing. Thankfully, the AEC has recently put out a couple of videos to explain their method. Considering how big a role preferences have played in the past (for example, getting Deputy Greens Leader Adam Bandt elected in the seat of Melbourne in 2010), and how big a role they are likely to play in the upcoming election, it is worthwhile to familiarise yourself with the process:

 

1) How the House of Representatives votes are counted:

 

 

2) How Senate votes are counted: