There are now two types of 'Honours' in Engineering.
The traditional one is denoted by a number e.g. Honours Class 1, Honours Class 2 Division 1, Hon 2-2, Hon 3.
The new one refers to the fact the degree is 4 years. This has come about due to some rule changes with the government. Every 4 year Engineering degree will now be an 'Honours' degree. They are pretty much the same degree as before but every uni renamed them to make them sound better. As people have said above, you will need to do an individual research project in 4th year to justify the term 'honours'. Last year if you averaged 60 you got an engineering degree, from this year you will get an engineering honours degree. Previous grads are not impressed.
BOTH versions will still exist. So the 'better' honours will be those with a Class. These will be based on your weighted (usually by year and thesis) average mark (WAM) over the full course. For example, a WAM 80 or higher at UNSW will give you Hon 1.