I am creating a Wordpress site and want to sell some online products. Problem I have come across is easy digital downloads does not set tax by default. What tax rate should I set as the default in Australia? Does the law require one to be set and, if so, what are the consequences of not setting it?
Depends on exactly what you are selling and whether your customers are in Australia or overseas.
The fact that you are selling online and your goods are digital is irrelevant.
Exports from Australia are typically GST-free. You would therefore need to configure your site so that it charges 10% tax if the customer lives in Australia. See the authoritative source for full details.