Thomas Gottaas, 19, was arrested on January 21, about two months after police officers swarmed his home seizing numerous electronic devices.
He has been accused of deceiving four teenage boys online, two of whom he knew from the community.
"The offences ... involved in some cases a degree of deception on the part of (Gottaas) who pretended to be a young female contacting young men under the age of 16 years," Justice David Davies said at a NSW Supreme Court bail hearing on Thursday.
The children, who ranged from pre-pubescent to 15 years old, were allegedly persuaded to provide sexual images of themselves, in some cases in exchange for money, the judge said.
Gottaas has been hit with nine charges, including producing and possessing child abuse material and engaging in child prostitution.
He was granted bail on Thursday after spending five months in custody since his arrest.
"That, according to his mother, has been a singularly unpleasant experience for him as can well be imagined," Justice Davies said.
The judge granted bail despite concerns raised by crown prosecutor Sally Stuart that he may bump into his alleged victims near his home or commit further offences.
"The bail concerns, although very legitimately held, are able to be sufficiently mitigated by the bail proposal that is put forward," he said.
Gottaas watched the hearing by audiovisual link from Sydney's Parklea prison.
He will live under home detention at his grandfather's place in Fairy Meadow south of Sydney and only allowed to leave under limited conditions.
His arrest and subsequent loss of income as a support worker at the NSW Department of Education and at a local bar meant his mother had to move out of their rental home in Picton and in with her father.
His grandfather has paid $900,000 into court which will be forfeited if Gottaas does not comply with his strict bail conditions.
These include surrendering his passport, being prohibited from being in the company of anyone under 16 and not to use a mobile phone or electronic device such as a tablet or laptop.
The former teacher's aide had no prior criminal record and, according to his mother, could have mental health concerns, Justice Davies said.
The Commonwealth Director of Public Prosecutions had taken over the case from the state DPP and further child abuse charges could be on their way, the judge was told.
The case will return to Campbelltown Local Court on July 9.
1800 RESPECT (1800 737 732)
National Sexual Abuse and Redress Support Service 1800 211 028
