It's not based on getting a 'higher' mark -- this implies that they did well despite going to a bad school. It's getting the top mark in that school (filtered by who has UNSW in their prefs), which could still mean not doing all that great. Getting the top mark in a shitty school deserves no more credit (in fact, probably less) than getting the top mark in a good school. It also gives an IMMENSE advantage to this possibly mediocre student, while a very good (but not top) student at a better school, who could have put in a lot more work and is arguably more deserving of that spot in their chosen course, would miss out. A friend of mine missed out on Combined Law at UNSW (by .05) because he only gets 3 bonus points, although his achievements in that area are substantial and notable; and yet they give out FIVE points, reserved in the EAP table for the highest echelon of international athletes and performers, to some more-or-less bright kid at a worse school.
I also disagree with the idea that the supposed top student at a school will be disadvantaged by their cohort. The assessment weighting scheme is very fair. If the rest of your cohort are bad enough that they have the potential to drag you down, then you should be consistently ranking higher than them in assessments anyway.