Gaspode

I've been playing WoW on a US server basically since launch, and on one of the classes which is probably most affected by a bad latency. Honestly I am completely used to it, and doubt I would leave my raiding guild behind for a lower latency. There's been times where it has been an issue, most notably Tranq Shot back when Tranq shot had to be perfectly timed, but in the end, we always found ways to deal with it.

Communication is also key, for example, any split second Misdirection shot (E.G. Illidan) I always get one of the American Hunters in the raid to cover, and you have to be honest in saying "I can't do this, my ping just makes it too hard".

It doesn't seem to matter so much as a DPS class, but I can see latency being an issue for tanking classes, a 400ms tank stance-dancing fears, just doesn't work. However I recently updated my rig, and went from 5fps to a constant 75fps while playing, which also changed from a weekly death on Archimonde, to never dying on Archimonde. I have not had one death due to standing for too long in an AoE, Doomfires, Cratering after Air Bursts, and so on, since upgrading my rig (Although i've certainly died to poor decisions and bad mistakes!). I am convinced that graphical performance affects play a lot more than latency does.

PvP however is a different kettle of fish. If it were a First Person Shooter type game there would be local Australian servers for Australian players to use, however WoW is unique in that its structure doesn't allow for such a thing. There's been so many times where I have straight up lost at PvP just due to latency. Interrupts not landing in time to stop a heal due to being delayed, and also just how much of an impact Line of Sight has somebody with a higher latency. I have not yet tried PvP on an Oceanic realm, against players with similar ping, but I'm not exactly prepared to reroll to find out either.

If Blizzard ever decided to make local servers in the Australia region, I think its really going to be for PvP ultimately. You can function very well in raids on a 400ms latency, and the current Oceanic flagged servers really do their job well to attract people who work and play in a similar time-zone to one place, but ultimately its going to be PvP which decides if they are going to put local servers in Australia. Probably the only thing slowing more raiding guilds down on the Oceanic realms down is the difficulty which comes with tanking on a high ping, if anything.