2011 was the 3rd year of the festival, and I've been able to go to it every year so far. My most favourite thing is the 'light' part of the festival. Artists from all over the world contribute light installations that are put up around the city that you can go and see for free.
The main lighting feature each year is "Lighting the Sails" where the sails of the Opera House are lit with beautiful changing designs. I was lucky enough to borrow a tripod from a friend which meant much better photos than would have been possible otherwise
Sydney is quite a "young" city, so we don't have the same kind of grand buildings as places like London or Paris, but one that we do have is Customs House and this year it featured a great changing display that looked like the building was re-wrapping itself every few seconds, it was just beautiful!