1 These are fruit bats, and they're big and noisy and poop a lot.  (They're common in Sydney too.)  Also, they can carry ABLV (Australian bat lyssavirus), related to rabies and deadly to humans, though not easily transmitted.

They don't like fireworks, I can tell you that.  I was living close to Sydney Harbour about 10 years ago, and the local bat population went nuts when the New Years fireworks went off.

2 So, are they migrating?

3 Sort of.  They live in big colonies - thousands of individuals - but if the food supply starts to decline they will decamp to a better locale.  And they'll commonly establish separate camps for summer and winter.

It sounds like multiple colonies have all decided to relocate to the one unfortunate town, because if the numbers are correct, this represents a quarter of the entire population of flying foxes.  

(I thought they were more common, because they're all over the place in Sydney, but I took a look online and they're not that widespread, it's just that Sydney is right in the center of their territorial range.)

4

Even if they aren't insectivores, they're still going to be important to the ecosystem. They spread seeds, for one thing, and their poop is ecologically important as fertilizer.

Don't underestimate the importance of that. There was a thriving ecosystem off the coast of Peru which had huge quantities of sardines in the water. Seabirds ate the sardines, and dumped a lot of their poop into the water, which fertilized the growth of lots of algae, which fed the fish. The birds also pooped on land, and the guano accumulated feet thick. Local farmers would show up occasionally with wagons which they shoveled full, and took back to fertilize their farms. (It was superb fertilizer.)

Unfortunately, factory fishing fleets learned of the fishery and moved in to harvest the sardines. They took too many, and the ecosystem collapsed into a lower state. Fewer fish, fewer birds, less poop, less algae, and thus fewer fish.

And the local farmers are now out of luck. That was decades ago and as far as I know it hasn't recovered.

5 Sorry, they were anchovies, not sardines.

6 Think of it as 100,000 flying raccoons descending on your peaceful town of 10,000 people.  And these flying raccoons are protected by law from almost anything you might do about it.

7 I'm sure it's miserable for the people there. I hope the government comes up with an acceptable response soon.