Is there any benefit to joining an Instance closer to your location (e.g. An Australian hosted instance vs one in Europe)

There is! Lemmy instances are generally going to be hosted from one geographic location, unlike a major corporate website like reddit that is likely to be hosted from multiple servers around the world. The closer the lemmy server is to you, the snappier and more responsive your experience will tend to be.

But there are other and larger factors, too. For one thing, if an instance is overloaded with more users than it can really handle, then that will more than outweigh the benefit of geographical proximity.

As things level out, though, and the increased traffic that lemmy instances are experiencing right now reaches a stable level, instance hosts should be able to adapt and overloading should become less of an issue. In the end I think you are likely to have the smoothest experience if you joined an instance whose server is located closer to you.