Brooded being upset by insanity somewhere in Australia (8)
I believe the answer is:
tasmania
'in australia' is the definition.
('Tasmania' is part of 'australia')
'brooded being upset by insanity' is the wordplay.
'brooded' becomes 'sat' (to brood eggs is to sit on them).
'being upset' is a reversal indicator.
'by' means one lot of letters go next to another.
'insanity' becomes 'mania' (I've seen this before).
'sat' in reverse letter order is 'tas'.
'tas'+'mania'='TASMANIA'
'somewhere' acts as a link.
This may not be correct. It may be part of another bit of the clue.
Can you help me to learn more?
(Other definitions for tasmania that I've seen before include "Aussie island state" , "What a relief!" , "Australian island to south of Bass Strait" , "Aussie's state" , "State off 23 [VICTORIA]" .)