This one might be something Australian and UK fans can answer better but I've noticed in the Australian schedule that the Melbourne Cup (and all other 2 mile races) are handicaps instead of weight-for-age.
I had a horse that came third in the Melbourne Cup but then couldn't win a Listed race but I checked the weights and he was carrying about 8kgs in the Listed race than in the Cup. Does the distance of the race mean the handicap weight is made lower?

If I'm creating custom 2 mile races, should they be handicaps rather than weight-for-age?

If anyone wants to give an answer that doesn't directly relate to Starters Orders, I'd be curious about that too

Handicap racing in Australia - especially in Group Races really comes down to the Australian psyche of levelling the playing field - if your horse is truly great it will carry the big weight and still win.
It's an interesting concept but it does have it's draw backs. WFA is probably a lot more fairer on good horses as they all carry set weights and it really is the best measuring stick for greatness but as I said, Aussies like to see the little guy win.
There are many Group rated handicaps in Australia over a variety of distances and I believe we are the only country to do it.....maybe New Zealand as well.

This is an excellent explanation, didn't realise the psyche behind it (never put the thought into it). I know a lot of trainers (not personally) who hate running horses in handicaps for exactly the opposite reason. I also look for high weights in this race who do well for breeding in the game when looking for stayers to breed my mares to. I also like to enter my under handicapped 3yo in the race and have a good record, nice prize money. No chance with my older horses who have been exploited.

But I have entered a high rated horse just to scare the opposition and enter an underrated horse who just gets in the weights, that works. Once got the field down to my own 3 horses. This tactic can be done in most big races but most effective in handicaps.

It's actually played out just the way I thought it would - I went in and changed the schedule to handicaps, then took the same imported horse to the same race, just it was a Listed Handicap instead of just Listed. He went from last place to first. His weight also changed as well.

I think maybe handicaps are fairer on not so great horses, which is why my horse is doing better at that at the moment. He's got like 90% stamina and 80% speed but not huge potential. But he did win the Melbourne Cup in this new save too - I'm using him and a couple of other horses in a TTF file to test a schedule.

I do see the Aussie battler spirit being part of the way of deciding to make it a handicap. But also to give that hope - the Melbourne Cup has been won by horses that weren't superstars, so it being a handicap seems to give a chance to the little guy, which is also kind of our nation's outlook too.

I've noticed the opposite too - some of my horses can't win handicaps but finally get them in a Conditions race or a Listed race and they win easily.

To add to previous responses, there is also a bit of an art in real life, in selecting a path to this race where you protect the handicap allocated (avoiding handicap penalties/rehandicapping if you win, winning but not winning too well, targeting ballot free races or even targeting races that attract no penalty for winning) so as to sneak into the race with a low weight, thus increasing the chance of victory.
True champions of this race can and have won this race despite the handicap allocated (see Makybe Diva winning 3 years in a row).