Do I understand correctly that if it wasn't for his odd situation, testing the law, that the innocent stateless people could have remained locked up indefinitely?

What a bizarre win.

a stateless Rohingya man, who faced the prospect of detention for life because no country had agreed to resettle him, due to a criminal conviction for sexual intercourse with a 10-year-old minor.

The high court declared that because NZYQ had been detained when there was “no real prospect of his removal from Australia becoming practicable in the reasonably foreseeable future” his detention was unlawful.

~~Is he likely to be tried now for the pedo rape? Is escaping prosecution for that crime what made him flee his country? Or was that~~ dealt with but no other country will now accept him because of his record?

EDIT: I had missed that the article links to the background story...

in 2015... he pleaded guilty to sexual intercourse with a 10-year old minor.

After serving a non-parole period of three years and four months, NZYQ was released from prison and sent into immigration detention in May 2018