Fraser Island is my favourite place in Oz. It is the world's largest sand island and has magnificent sand dunes, freshwater lakes, rainforest - all next to the grand Pacific Ocean. The champagne pools were glorious for wading, even for the most inexperienced swimmer. Lake McKenzie is an amazingly clear freshwater lake which is also excellent for swimming. As for wildlife, I had the pleasure of seeing wild brumbies on the beach. There were also many dingoes on the island. They were a bit of a nuisance and were especially out and about when they could smell food.
To reach Fraser Island, many backpackers go to Hervey Bay, where they rent a 4WD and take the barge to the island. I was most fortunate to meet 7 other individuals at a hostel in Hervey Bay who shared the expenses of renting a 4WD and food. When you go, be prepared for the possibility of inclement weather, as the cheapest way to stay on the island is by camping. The camp sites are well-maintained.