In general, people study hard for biomed so that they can say they study biomed.
There is some other perceived benefits, such as a smaller cohort, some units being biomed specific (particularly early on in the degree) and not needing to plan your degree much but still fulfil the prereqs for the Melbourne MD.
But for a lot of people, it really is simply the case of biomed sounds more impressive to them and their families than science does. You are right, though - the ATAR for science is generally lower than biomed (in fact, recent statistics suggests that soon Monash science will have a higher ATAR than Melbourne science. We'll have to wait until Jan to know for sure, though), and you can get into postgrad med with a BSc if you pick the right units. (the Melbourne MD does have second year biochemistry, anatomy and physiology prereqs that you'll need to make sure you do)