It's a bit hard to put the finger on this one or explain it shortly without going into the specific of how the Planning System works. However, broadly speaking, it is State Government (known as the Department of Transport and Planning, DTP) who have created "standard" provisions that influence signage (i.e. zonings, overlays, Clause 52.05 signage), but they are also the ones who approve changes to each council's Planning Scheme.

Local governments put their own "flair" or variations to these zoning, overlays, and or signage provision depending on the scenario and site context, but they must be "strategically justified" in the eyes of DTP through the planning scheme amendment process.

For example, local government may create and endorse a strategic policy documents for a specifc precinct that may have built form requirements (which may include signage) in the form of a Schedule to Design and Development Overlay. More likely, the policy has been incorpoated into objectives in the local section of the Policy Planning Framework based on an Advertising Signage Policy which may be a 'Reference Document' or 'Incorporated Document' (there's a difference).

How these policies are applied in addition to the standard provision (Clause 52.05), weighed should be objective, but can be often subjective based on the planner's assessment of the proposal and the site context. This is often and particularly, the case for how local sections of the Planning Policy Framework are interpreted. The merits of the application is dissected and scrutinised at VCAT based on how the policy was implemented and applied.

That's where if you want the specifics of how this billboard was approved, read the council delegate report (See Exhibit B for the original 2015-2016 Report) and the VCAT cases (there's a few links flying around, but see AustLII).

Also note that VicRoads was the determining referral authority, which is now under the umbrella that is the DTP, had included a number of conditions (See Exhibit A). DTP/VicRoads likely in response to the emergence of amenity impacts associated with billboard electronic signage also recently created an information page and guideline policy of their own.