There's a FAQ up on the NNSW website.

Sounds like no teams in the same division from the same club, if the lower team earns promotion they would offer it to second place.
They don't mention the possibility of a team being relegated down to a division with an existing team, unsure of the scenario there.

No teams from the same club allowed in NPL and NewFM due to the playoff tournament arrangement.

Sounds like NNSW is not mandating Zone comps to drop third grade, however on promotion to NewFM a team would be only be able to field the two grades.
Control over whether ZFLs stay with existing setup of three grades or otherwise would be under the control of the Zones, as I read it.