By definition, a harbour is, well, a harbour. It's a protected waterway safe for vessels in nearly all weather. In Sydney Harbour both the indigenous & later occupying settlers chose well, it's a spectacularly well protected place, safe from the predominating long period southerly swells that often blitz the surrounding coast.
I would say I've seen maybe a dozen days of challenging paddling in or around the entrance to Sydney Harbour in all my years paddling the harbour. Rob has a great yarn about smashing his wooden boat to pieces on the steps of the Neilsen Park Kiosk on one day when the swells wrapped all the way in to the bay. Yet only a kilometre or so either direction of the heads outside the safety of the harbour you'll nearly always find a very different proposition, where high cliffs & deep water combine to produce a fantastic variety of dynamic water.
The Sow & Pigs washing machineThe exposed headlands around Middle Head can get some refracted swell, but it's been greatly broken down by the time it gets in there & has neither the wavelength or associated speed to produce genuine ocean conditions.
The dozen or so big water events I've seen inside the harbour coincide with a strong & persistent wind, coupled with some very long, powerful swell, usually with a bit of east in the direction.
One such day materialised last Tuesday, & Rob, Dave Rowan & Chris got some great video of the ocean conditions to seaward (top of page) that produced spectacular breaking surf off Sow & Pigs Reef, smack bang in the middle of the main channel of the outer harbour. The reef was going off, with multi directional breaking water giving the guys more than a few long, bouncing, broadsiding rides through the whitewater.
Chris heading across Sow & Pigs Reef
Rob being lined up by a rolling Piggie wall