Stupid limited nintendo being stupid and limited, still thinking that there is 90-s around and no glabolization has been applied to the world.
Funny enough, physics hasn't changed since the 90s. Faster connections today, still do nothing to overcome the massive distance betweens places and the time it takes to get there. EU to AUS is still 350ms+ today and that's not changing anytime soon, so not sure what being stuck in the 90s has to do with it.
Unless you are one of the "not teleporting", not lagging, just because the netcode is hiding it.
I'm sorry, but have you actually played Splatoon? I've been playing since launch and only disconnected twice since launch. Most people reporting regular disconnection often leave out that they have unstable or slow internet, which can contribute to regular disconnection.
On topic, there should be an option for worldwide play. Removing it outright doesn't solve the problem, it only hinders the online experience. And region-locking is a relic of the past, that needs to stop.
Splatoon should absoluty have regional. While I don't suffer disconnects, with the game continually making every lobby 7/8 Japanese, it's just awful for EU players. EU to Japan is at least 250ms+ ping, which is just absurd for a game like this.
And no, no connection will make a difference to that and no it's not "lag-free" for you other EU players just because the netcode hides it, if you think 250+ is lag free, you are crazy.
Back on topic.
Pointless seeing as Nintendo think Australia is part of EU. If they actually done a proper job I have no problem with it though. Best servers on pc games are always local + ping limit.