Gillard was feted in the old, historically-preserved goldmining town by locals, children, travelling Australians and Australian immigrants to New Zealand.
Pete Gawron, the founding owner and chef at Saffron restaurant, was originally from Adelaide and had been in New Zealand for 14 years.
"I miss the beaches in Australia but this is an extraordinary place, and we get four seasons here," he said.
"In Melbourne we do that in a day," Gillard replied.
There was one noisy upset from a small boy named Kalem, who was intent on wresting from Gillard a kiwi toy which a shopkeeper had just presented her.
In an instant, Gillard knew that giving away a kiwi would create even more upset to her hosts - so she gently but firmly held on to the toy.
It was a picture-book walkabout in a picture-perfect town. Even the local Harley Davidson chapter were welcoming, and offered Key a go on one of their machines.
An earlier visit to the Queenstown War Memorial was not quite as perfect.
During a wreath-laying ceremony, Key appeared to have difficulty keeping his eyes open for a couple of minutes. He kept rubbing his eyes, but no sooner had he opened them than they would shut. He said later, through a spokeswoman, that the problem was because of the glare on the war memorial, which made his eyes water.
It was about 24C and bright sunshine but he did not look in danger of fainting, as he did several weeks ago at a Christchurch restaurant.
The ceremony was watched by a couple of hundred people, and both Prime Ministers were warmly welcomed and applauded when they drove away.
One lone protester, who would give her name only as Fay, held a placard saying "Close Nauru". That was a reference to the island nation that hosts one of Australia's offshore processing centres for asylum-seekers, which Gillard has re-opened recently. The prospect of being detained on Nauru for years is designed to deter the arrival of boat people.
Key yesterday agreed to take 150 refugees a year from the offshore processing, within New Zealand's annual quota of 750 refugees.
He said it recognised the intelligence and support on illegal arrivals New Zealand received from Australia, and suggested mass arrivals in New Zealand could be processed by Australia's offshore centres if the law was changed.
Key and Gillard took their delegations to dinner at Amisfield Winery Bistro near Lake Hayes. Gillard leaves Queenstown this morning.
