Rod Sims, head of ACCC at the time, asserted that Valve's original no-refund stance broke Australian law.
> Under Australian Consumer Law, everybody who buys a product or a service has a right to a refund if the product doesn’t work. They have a right to a refund, or a repair. Those rights are enshrined in Australian Law, and our allegation is that Valve sought to remove those consumer rights which is a breach of Australian Consumer Law
[1] https://gizmodo.com.au/2014/08/accc-commissioner-heres-why-w...
Digital goods are treated differently by the act to other goods(hence them being mentioned specifically in this section).
Purchasing non-digital goods online provides a greater right to return them even if they are not faulty. Digital goods, as your quoted section points out, can be returned if they are not of (objectively) satisfactory quality.
The two week mandatory, no-fuss return you mentioned originally only applies to non-digital goods/services bought remotely.
That was however not Valve's idea, but only came in response to EA Origin offering a return policy in 2013, Valve follow up in 2015 with their own.
One of the very rare cases where the competition was a little ahead for once.