Kurnell was by far the worst hit winds reaching up to 213km/h.
"It is so very rare to get a tornado inside Sydney, much less a strong tornado," a Bureau of Meteorology spokesman said. "That is the fastest speed that has been recorded in New South Wales history."
An evacuation centre for Kurnell residents was set up at the Cronulla Leagues Club on Captain Cook Drive, in the Sutherland Shire.
A 40-year-old man in Kurnell suffered head injuries, a 38-year-old man was treated for shock and another patient was treated for an unspecified condition. A 75-year-old woman received cuts to her leg, while a man was struck by debris and an elderly man was treated for anxiety. All patients have been taken to Sutherland Hospital in a stable condition.
The Westpac rescue helicopter has recorded images over Kurnell showing major structural damage to homes.
Jenny Zhou, who works at the local Friendly Grocer in Kurnell, said the roof leaked and the shop flooded.
Beth, who lives and works in Cronulla in the city's south, said "golf ball-size hail" fell on St Andrew's Anglican Church. "We had ... lots of thunder and lightning. The wind was strong and it was hitting our glass windows. I have a big dint in the front of my car."
The desalination plant in Kurnell was evacuated after reportedly sustaining significant damage and workers were also cleared out of the Caltex refinery as a safety precaution.
Sydney Airport closely monitored the storm activity with passengers being advised to check flight details.
Qantas delayed several flights and cancelled some.
The main road to Kurnell, Captain Cook Drive, was closed.
Two trucks were blown over by the wind on Chisholm Rd but nobody was injured.
Kurnell local Melanie Bowman said tiles had come off her roof and powerlines were down.
"I can see the sky from our garage ... I can see lots of parts of roofs in the street," she said.
"It felt just like a cyclone with hail and high winds. My husband has left to come home from work and he can't actually get out here."
The SES received more than 417 requests for help with 31 volunteer team working in the Kurnell and Illawarra areas with reports of damage to infrastructure, power lines, trees and roofs.
Ausgrid crews inspected damage to the electricity network but tweeted that restoring the network will take time depending on the scale of damage.
NSW fire crews were on the scene at the Bondi Junction shopping centre where water has poured in after a roof collapsed.
Bondi Pizza waiter Michael Seeff says people started shouting "the roof has collapsed" and some customers ran out before paying the bill.
"Water was coming down the sides of the walls and onto the floor," he said.AAP
