The main point for me is not whether or not they can actually coerce me, but whether or not this is going to affect my employability. I have seen in various news articles reporting that, apparently, companies based in the USA and EU are currently wary of hiring Australian developers because of this law.

Regarding your point, my understanding (I'm not a lawyer so I may be wrong) is that, in general, the law of a country applies to residents only while they are residing in the country, and it ends being applicable after they leave the country. For citizens this is certainly not the case, e.g. even though I haven't been to Italy since 2013, as a citizen I still have some rights and obligations.

Still, it's rare for citizens to be affected if they are outside the country.

The relevant legislation seems to be https://www.legislation.gov.au/Details/C2018B00180, it doesn't contain the word "citizen".

The text is actually neutral on such questions. In theory, I think it could be applied to anyone in the world, regardless of citizenship or residence. However, in practice people with no connection to Australia would be likely to just ignore it.

A law enforcement officer (or another person on the officer’s behalf) may apply to an eligible Judge or to a nominated AAT member for an order (the assistance order) requiring a specified person to provide any information or assistance that is reasonable and necessary to allow the law enforcement officer to do one or more of the following:...

You have a point that they'd have more leverage against Australian citizens, especially if they don't have alternative citizenships (so that they need passport renewals) or intend to travel to Australia in future.