The now-18-year-old was charged in March with collecting manuals, guides and material promoting Islamic State-inspired terrorism and importing a prohibited item, namely an IS flag.
An investigation was launched after intelligence indicated the flag, destined for an inner-city Melbourne address, was imported into Australia.
The teen was identified as the flag's alleged intended recipient, with counter-terrorism detectives raiding the address and seizing a USB, mobile phone and laptop.
On the USB, detectives allegedly found a photo of a bomb in a backpack and instructional materials for the preparation of explosives which set out ingredients required and steps to assemble devices.
A video depicting a balaclava-clad man conducting an explosives demonstration while Arabic music played in the background was allegedly found on his laptop.
Detectives claimed to have also located magazines promoting jihad, martyrdom, extremist interpretations of Islam and multiple photos of IS flags.
Analysis of the boy's iPhone allegedly showed searches for train derailment operations, including texts, photos and methods to derail trains and targeting other means of transportation.
His phone browser history alleged included searches for IS, IS wallpapers, and Apple Maps searches for synagogues and the busiest intersections in Melbourne.
Investigators also allegedly found videos of IS and al-Qaeda propaganda, terrorist attacks and extremist cleric sermons advising on martyrdom, jihad and lone attacks.
He allegedly attempted to conceal his searches using VPNs, "Hide My Email" tools, and dark web indexing.
The boy appeared before a Children's Court on Thursday for his second bail attempt.
The lead investigator opposed bail, claiming the boy was in the process of self-radicalisation and no bail condition could alleviate the risk.
A report from psychologist Rajan Darjee concluded the boy's likely undiagnosed autism contributed to his low empathy, issues developing and maintaining relationships and an inferiority complex which made him more susceptible to exploring extremist material.
While the boy may have been moving towards lone-actor extremist violence, Dr Darjee said there was no evidence it was imminent.
"(He was) in a stage of research at most, rather than gathering material to undertake an attack," he said.
The prosecutor cited unacceptable risk from the serious allegations and the boy's potential path towards violence in his opposition to bail.
Dr Darjee's concern that the boy was not fully open about his conduct made it difficult to assess the true risk, which the prosecutor said had not changed since his initial bail attempt.
The defence argued the risk could be ameliorated because the boy's first time in custody had left him on edge and would act as a personal deterrent to future offending.
The boy's lawyer said his client's age and the need to reduce the impact on his education were important mitigating factors, saying a bail refusal risked further stigmatisation he had to repeat year 12.
The teen acknowledged he had made serious mistakes, recognised the consequences and accepted responsibility in a letter to the court.
Considering all the matters, the magistrate was satisfied in granting bail.
"While there is risk, the risk can be rendered acceptable," he said.
Among the long list of bail conditions, the teen will have a nightly curfew, must report to police three times a week, not to be within 100 metres of a synagogue and not to drive a car.
Prosecutors have flagged an appeal on the decision in the Supreme Court.
The offences carry a maximum penalty of 15 years in prison.
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