Dumbing things down a lot.
Lower house - proposes laws
Senate - passes them or blocks and suggests revisions
Lower house is voted in by instant runoff preferential voting. You order the parties you like first to last and votes are counted. If one has over 50% of the vote, they get in. If not the party with the lowest votes is eliminated and their votes are distributed according to preferences. Repeat until one party gets over 50%
In the senate, all votes are counted, then you look at how many seats are up for grabs. Say there are 20. If a party has more than 5% of the vote, they get a seat and votes are distributed according to preferences (all of them, proportinally, so if one candidate gets 10% of the vote every vote is sent on to it's second preference at 50% of it's original weight (parties will usually have multiple candidates and so party A with 10% of the vote gets two different candidates elected). Repeat as long as someone has more than 5% of the vote, if they don't, eliminate the party with the lowest votes and redistribute.
So in the lower house it does boil down to being a two party system a lot of the time but smaller parties and independents do win seats - often becoming a deciding vote and getting more say than you'd think 1 seat would indicate)
In the upper house any party with a significant vote gets some representatives elected, it's quite good. Unfortunatly it seems around 80% of the population are mindless sheep and vote with one of the two major parties in the upper house DESPITE there being literally DOZENS to choose from! But that's the problem with democracy :(