How does the subclass 491 lead to permanent residence?

The 491 is designed as a stepping stone. Once you have held it for at least three years, lived and worked in a designated regional area, and met the minimum taxable income requirement for the required years, you become eligible to apply for the Permanent Residence (Skilled Regional) visa (subclass 191).

The 191 then removes the regional restrictions and gives you permanent residence. Keeping good records of your income (ATO notices of assessment) and your regional address throughout the five years is the key to a smooth transition.