Queensland pilot William Henry Scott-Bloxam, 62, was jailed for three years for flying a small plane into the region without permission.
Mr Henry's four passengers - his 54-year-old wife Vera; Hubert Hufer, 57; Karen Burke, 51, and Keith Ronald Mortimer, 60 - were jailed for two years.
The Australians were being held in Merauke Prison, but have been released after their lawyers requested mercy from the courts.
The group is now in "city detention", meaning they are free to move about Merauke but cannot leave, according to their lawyer, Efrem Fangohoy.
"The defendants are old and they're frequently sick," Fangohoy told AAP.
"And William and Vera, they just lost their son, which was a big shock for them."
Fangohoy said his team was still finalising their appeal and hoped to submit it soon.
The group, from Cape York on the northern tip of Australia, made the one-hour flight to West Papua from Horn Island on September 12.
They described it as a sightseeing flight and mistakenly believed they could get visas on arrival in Papua.
There are strict restrictions placed on visiting Papua, which has been troubled by a low-level separatist insurgency since the 1960s.
Journalists are barred from entering Papua without special permission, and human rights groups have accused the Indonesian military of widespread human rights abuses there.