The families, including the victims' parents, embraced after viewing the 210 floral cubes that have been scattered in a starburst pattern.
Survivor Louisa Hope said the memorial, which will illuminate at night, was a fitting way to remember the lives lost. The tribute, designed by Professor Richard Johnson and artist Jess Dare, was inspired by the sea of 110,000 bunches of flowers that blanketed Martin Place after the 17-hour stand-off.
Eighteen people were taken hostage by Man Haron Monis in the cafe on the morning of Monday, December 15.
Police stormed the cafe at 2am the following day when Monis executed Johnson. Dawson, a mother of three, died from police bullet fragments.
Earlier this year, NSW Coroner Michael Barnes found that police waited 10 minutes too long in storming the premises.