Also an Aussie; first heard it called “cash back” while in London UK. Found it very confusing. Cash back from where?
Because unlike in an ATM withdrawal where you take money out from your bank, you just paid the merchant a bunch of money, and the merchant is giving some of that payment back to you as cash.
In Australia, a retailer will only hand you cash if you pay using EFTPOS (analagous to debit in USA parlance, but is a domestic bank network) which has a very low fixed fee per transaction. That is, if the transaction is happening anyway, an additional "cash out" component has zero bank fees and thus zero cost to the retailer; it may even be desirable if it lowers their cost/risk involved with banking cash.