Perhaps its different rules for Documented boats versus State registered only? But I agree - if you are going to have a name it should be readable.
That's the case here. State rego is mandatory but rules cover rego numbers only. Boat names, size & font and location is not covered or required.
But if you want to travel outside the country you also need national rego with AMSA. In this case the size of lettering, and font, is regulated for both the rego numbers and boat name. You need a secure/tamper resistant number internally as well, and it is broadly equivalent to USCG documentation.
One difference is that in Australia you have to nominate a home port from a short list of designated ports. I find it weird that it appears the USCG will accept anything, even a place nowhere near water, as home port.