Finding smaller surf in Sydney

Start your search for smaller waves at the south end of any beach (except Bondi). Look for somewhere out of the wind. Remember that overcast and cold weather generally keeps the crowds away.
Heavy rain can be a health problem.
For places you may not have thought about see the Sydney Beach Map: maps.google.com/maps

See the great graphical representation of the surfing forecast at seabreeze.com.au
AND
Video of Neilsen Park inside the harbour breaking in April 2009.

Australian Seabreeze

Sydney forecast

In fact if you need to know what the wind is doing anywhere in Australia, this site has live wind graphs and seven day wind & wave forecasts presented in an easy to read format.

They also have a listing of Second Hand Kitesurfing and Windsurfing Equipment.