I went ahead and changed DNS Provider settings (Advanced options > Local Network) to 'Google' like so...
Then I went to a well known blocked website and to my surprise received this warning page telling me about Federal Court of Australia copyright infringement blocking...
Well that should not have happened since this blocking is implemented at DNS level and the Telstra Smart Modem 2 (by Arcadyan) DNS settings were just changed. At first I thought that maybe Telstra is doing something funny with DNS by not really going to Google DNS servers first, until I noticed this in my Mac's network configuration...
Sure I had the usual Google DNS servers (8.8.8.8 and 8.8.4.4) in there, but I also had another DNS server with an IPv6 address listed. Turned out this was the modem's IPv6 address and when I went back to the IPv6 Local Network I could see that Telstra was still listed as a provider for IPv6. Silly me for not noticing this before!
So there were two ways to go about this, either disable IPv6 or change the IPv6 DNS settings to Google or some other provider. I did the former.
Once the IPv6 DNS settings were changed, the website that I was trying to access earlier was no longer blocked. So that's a good lesson - when changing DNS settings, don't forget about IPv6 DNS too!
-i