Sydney is one of the most multicultural cities in the world, which reflects its role as a major destination for immigrants to Australia. According to the Mercer cost of living survey, Sydney is Australia’s most expensive city, and the 21st most expensive in the world.

Sydney's urban area is in a coastal basin, which is bordered by the Pacific Ocean to the east, the Blue Mountains to the west, the Hawkesbury River to the north and the Royal National Park to the south. It lies on a submergent coastline, where the ocean level has risen to flood deep river valleys (ria) carved in the hawkesbury sandstone. Port Jackson, better known as Sydney Harbour, is one such ria and is the largest natural harbour in the world. The Sydney area is not affected by significant earthquakes. The urban area has around 70 harbour and ocean beaches, including the famous Bondi Beach. Sydney's urban area covers 1,687 km² (651 sq mi) as at 2001. The Sydney Statistical Division, used for census data, is the unofficial metropolitan area and covers 12,145 km² (4,689 sq mi). This area includes the Central Coast, the Blue Mountains, and national parks and other unurbanised land.

Geographically, Sydney lies over two regions: the Cumberland Plain, a relatively flat region lying to the south and west of the harbour, and the Hornsby Plateau, a sandstone plateau lying mainly to the north of the harbour and dissected by steep valleys. The parts of the city with the oldest European development are located in the flat areas south of the harbour. The North Shore was slower to develop because of its hilly topography and lack of access across the harbour. The Sydney Harbour Bridge was opened in 1932 and linked the North Shore to the rest of the city.

Sydney's central business district (CBD) extends southwards for about 3 kilometres (1.25 mi) from Sydney Cove, the point of the first European settlement in the area at the southern end of the bridge known as "The Rocks". Densely concentrated skyscrapers including Sydney Tower which is the city's tallest structure. Other buildings including historic sandstone buildings such as the Sydney Town Hall and Queen Victoria Building are interspersed by several parks such as Wynyard and Hyde Park. The Sydney CBD is bounded on the east side by a chain of parkland that extends from Hyde Park through the Domain and Royal Botanic Gardens to Farm Cove on the harbour. The west side is bounded by Darling Harbour, a popular tourist and nightlife precinct while Central station marks the southern end of the CBD. George Street serves as the Sydney CBD's main north-south thoroughfare.

As the site of earliest European settlement in Australia, the CBD contains many other historic buildings such as the Sydney Mint, one of Australia's oldest buildings, Fort Denison, a penal site which was built in the colonial days on a small island situated on the harbour, as well as heritage listed buildings in The Rocks. The area also boasts well known modern architectural sites such as the Sydney Opera House and Martin Place.

Although the CBD dominated the city's business and cultural life in the early days, other business/cultural districts have developed in a radial pattern since World War II. As a result, the proportion of white-collar jobs located in the CBD declined from more than 60 per cent at the end of World War II to less than 30 per cent in 2004. Together with the commercial district of North Sydney, joined to the CBD by the Harbour Bridge, the most significant outer business districts are Parramatta in the central-west, Penrith in the west, Bondi Junction in the east, Liverpool in the southwest, Chatswood to the north, and Hurstville to the south.

The extensive area covered by urban Sydney is formally divided into more than 300 suburbs (for addressing and postal purposes), and administered as 38 local government areas. There is no city-wide government, but the Government of New South Wales and its agencies have extensive responsibilities in providing metropolitan services. The City of Sydney itself covers a fairly small area comprising the central business district and its neighbouring inner-city suburbs. In addition, regional descriptions are used informally to conveniently describe larger sections of the urban area. These include Eastern Suburbs, Hills District, Inner West, Canterbury-Bankstown, Lower North Shore, Northern Beaches, Northern Suburbs, North Shore, St George, Southern Sydney, South-eastern Sydney, South-western Sydney, Sutherland Shire and Western Sydney. However, many suburbs are not conveniently covered by any of these categories.