I am working in the early childhood sector and have noticed a lot of differences in the ways childcare services interpret the regulations in relation to sleep. Some services require an educator to physically remain within a distance that allows them to see and hear children, while also carrying out sleep checks. Others may leave the area where children are sleeping to supervise other children outdoors or in other spaces, only watching/listening through a baby monitor, and returning to the room with sleeping children to carry out sleep checks. What is the recommendation in relation to using a baby monitor vs physically seeing and hearing sleeping children at all times?

Supervision of sleeping children in Child Care, including sleep checks, are regulatory issues that are required by ACECQA & your local state regulator.
While Red Nose does not have any other information than that provided by ACECQA, we do support the requirements for supervision of all children when they are sleeping.
Red Nose (& other safety organizations like Kidsafe & ACCC) can also provide input in relation to Safety in Sleep & recommendations to reduce the risk of infant death & injury.
https://www.acecqa.gov.au/resources/supporting-materials/infosheet/safe-sleep-and-rest-practices

ACECQA provides the following:
“Children sleeping and resting will always be adequately supervised so that educators can supervise children’s safety and wellbeing. Educators will be able to visually check the child’s sleeping position, breathing and the colour of the child’s lips and skin, body temperature, head position, airway and the child’s head and face, ensuring they remain uncovered.
• The circumstance and needs of each child should be considered to determine any risk factors that may impact the adequate supervision of sleeping and resting children. For example, babies or children with colds, chronic lung disorders or specific health care needs might require a higher level of supervision while sleeping.”
P3 - https://www.acecqa.gov.au/sites/default/files/2024-08/PolicyGuidelines_SleepRestForChildren_August2024.pdf
Each Service needs to develop their own Policy in alignment with ACECQA & the local State regulatory authority is responsible for monitoring compliance under the NQF.
As far as the use of a monitor is concerned, NSW State regulators have the following statement on P13
“The NSW ECEC Regulatory Authority does not consider that a service/educator using CCTV, audio monitors or heart monitors instead of physical checks demonstrates adequate supervision. Looking through a window to conduct a check is not adequate. Educators must physically check sleeping children in person at the cot side (or side of the floor mattress/toddler bed for children who have moved from a cot)”
NSW Dept Education - ECEC
If you are not from NSW, please check with your local regulators, although I would expect their information would be similar.
Red Nose does not recommend routine electronic monitoring for all babies but there may be situations where monitoring is recommended for some babies. This still does not remove the need for regular checking of all babies when sleeping. Monitor use is not a substitute for regular checking.