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Came across the first attached DSE publication on riding in Forests.
Interesting reading when combined with Vic Roads Rec Reg info which also says you can ride with Rec Reg outside of built up area's plus a bunch more.

Vic Roads. (Attached is the 2004 Act)

Recreational motorcycle registration
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Recreation registration allows you to ride a motorcycle in certain areas without obtaining full registration.


Eligibility 
Any two-wheeled motorcycle can be registered as a recreation vehicle.

To operate a recreation vehicle you must be at least 18 years of age and you must also hold a motorcycle learner permit or licence to ride on a road.

Minimum construction requirements
All recreation motorcycles must have:

    a rear vision mirror fitted to the right hand side
    brakes fitted to both wheels, capable of working independently if one brake fails
    one head lamp
    one rear red tail lamp
    one rear red brake lamp
    one rear white number plate lamp
    a silencing device which restricts the noise level to 94 dBA or less
    an appropriate horn or warning device wired into the motorcycle's electrical system
    a chain guard that protects the rider from the front chain sprocket


IMPORTANT

    All lighting used must be of a type intended for use on motorcycles.
    A 'total loss system'* power source for the lighting is not acceptable.
    If a battery is fitted to the motorcycle, an integrated charging system, such as an alternator, is required.
    Magneto driving lights are acceptable if a battery is not fitted.

    * A  'Total loss' system is one where the lights are powered in such a way that continuous power to the lights is not possible. For example, lights powered by batteries are not continuously rechargeable and can therefore run down. This is a safety measure to ensure that lighting is available to the rider when it is required.

 
Conditions
There are a number of conditions applying to operating a recreation vehicle. They are:

    Recreation motorcycles are only permitted to be operated on roads (except declared freeways and arterial roads, including roads formerly designated as forest roads, under the Road Management Act 2004) that are:
        located outside "built up areas" as defined by speed zones of less than 100 km/h, or
        those areas that are not a road and are solely for the training and assessment of a holder of a motorcycle learner permit by an organisation approved by VicRoads for that purpose
    the vehicle must not carry any load or a person other than the rider
    the rider must wear a protective helmet of the type approved under the Road Rules Victoria


Make an appointment
You will need to attend a VicRoads Customer Service Centre to register the vehicle. An appointment is necessary.

The motorcycle will need to be inspected unless it was previously registered, you were the registered operator and the vehicle details have not changed. When you make the appointment you will be advised whether an inspection is required..You can make an appointment by:

    calling VicRoads on 13 11 71 (Mon-Fri 8.30am - 5.00pm, Sat 8.30am - 2.00pm). You can pay by credit card (Visa or Mastercard); OR
    visiting a VicRoads Customer Service Centre. You can pay by cash, cheque, EFTPOS or credit card.


When making an appointment you will be asked for the vehicle identification number (VIN) and the engine number.

Cancelling or changing your appointment
If you want to change an appointment you will need to pay another appointment fee. The inspection fee can be transferred to a new time (or refunded if the inspection is cancelled) if 24 hours notice is given.


What to bring when registering the vehicle

    the vehicle (if an inspection is required)
    evidence of identity (see below)
    evidence of ownership of the vehicle (a receipt or contract of sale identifying the vehicle by engine number and/or VIN showing the full name and address of the previous and new operator)


Recreational motorcycles do not require a roadworthy certificate.


Number Plates
Only one number plate will be issued. It must be attached to the rear of the motorcycle and be clearly visible before the vehicle may be ridden on a road.


Fees
You will need to pay the following fees:

    Appointment and Inspection
    Recreation registration
    Standard number plate
    Transport Accident Commission charge
    Motor vehicle duty


View the full list of fees

There are no fee concessions available for recreation registration.

Evidence of Identity
On the day you register the vehicle you need to bring your current Victorian driver licence/permit. If you cannot provide this you will need to bring original evidence of identity documents. You must provide:

    one primary evidence document (eg. Australian birth certificate or current passport)
    one secondary evidence document (eg. Medicare card, credit/account card, student identity card, bank statement)
    evidence of residence (if not indicated in the primary or secondary documents)


One of these documents must have your signature on it.

Here is some info out of the 2004 Act:

non-arterial State road means a State road which is not a freeway or an arterial road.

State road means a road which—
   (a)   is a freeway or arterial road; or
   (b)   is declared to be a non-arterial State road under this Act; or
   (c)   is the responsibility of a State road authority under another Act;

Seems that it comes back to the VicRoads and DSE summary being:
"Recreation motorcycles are only permitted to be operated on roads (except declared freeways and arterial roads, including roads formerly designated as forest roads, under the Road Management Act 2004) that are:
        located outside "built up areas" as defined by speed zones of less than 100 km/h OR Declared"

Hi Brad, a bit late now to be reading the fine print regarding  rec rego  :), you also have to watch the tourist road, a few people have been booked around woods point.

Located outside of built up areas, a built up area has speed restriction zones

Not declared as freeways, state highways, main roads or tourist roads under section 2 of the transport act 1983.
 
Roads classified 3000-3999 or not classified in the Vicroads Directory.

Cheers,
Gary

You might also find this link useful - it has maps of the declared roads:

http://maps.vicroads.vic.gov.au/

Thanks Gary appreciate the info. Would the tourist Rd be an arterial road?

Just want to know where I stand if and when Mr Plod or the DSE come along.
 
No longer see the value in paying full rego when I would be on the bike 40 days a year outside of built up area's.

Thats Gold Peter, good one!

It's also worth having a look at the actual Vicroads country roads street directory. It has the actual road classification numbering shown, and you can work out whether or not you can legally ride on the road.

http://www.racv.com.au/wps/wcm/connect/Internet/Primary/travel/maps+_+guides/guides+_+books/RACV+vicroads+country+street+directory+8th+edition

I found a more up to date article this morning on the DSE web site its attached.