Jab's next explanation is wrong. _______________________________________________________ オーストラリアで住んでいます。 オーストラリアに住んでいます。 They're both correct and they both mean I live in Australia. _______________________________________________________ We don't say "オーストラリアで住んでいます。". We say "オーストラリアに住んでいます。" or "オーストラリアで暮らしています。" When "に" and "で" are used as a place, "に" is used with a static verb and "で" is used with an active verb. "住<す>む" is "to live/to stay". It's a static verb. It's meaning is similar to "be". "オーストラリアに住んでいます。" means almost "I am in Australia ". "暮<く>らす” and "生活<せいかつ>する" are active verbs. So we say"オーストラリアで暮らして／生活しています。". It's meaning is " I live in Australia ". And it means almost "I am spending time in Australia. ". I'll show an another example. 私<わたし>は銀行<ぎんこう>に勤<つと>めています。I work for a bank. similar to "I belong to a bank." 私は銀行で働<はたら>いて／仕事<しごと>をしています。I work in/at a bank. similar to " I handle work in a bank."

I think で is when you do something at that place and に is for just going there. A bit hard to explain, let me give you some examples. 日本でカラオケをしました。 (nihon de karaoke wo shimashita) meaning I went/did karaoke in Japan. 町に行きます。 (machi ni ikimasu) meaning I'm going to the city/town In Some cases Yu can use them interchangeably for example: オーストラリアで住んでいます。 オーストラリアに住んでいます。 They're both correct and they both mean I live in Australia. I think it's because 'living in a place' isn't really an act of doing something in particular.