Effective grazing management in Australia’s semi-arid rangelands requires monitoring landscape conditions and identifying sustainable and productive practice through understanding the interactions of environmental factors and management of soil health. Challenges include extreme rainfall variability, intensifying drought, and inherently nutrient-poor soils. We investigated the impacts of grazing strategies on landscape function—specifically soil health—as the foundation for productive pastures, integrating the heterogenous nature of grass tussocks and the interspaces that naturally exist in between them. At Wambiana—a long-term research site in north-eastern Australia—we studied two soil types, two stocking rates (high, moderate), and resting land from grazing during wet seasons (rotational spelling). Rotational spelling had the highest biocrust (living soil cover), in interspaces and under grass tussocks. Biocrusts were dominated by cyanobacteria that binds soil particles, reduces erosion, sequesters carbon, fixes nitrogen, and improves soil fertility. Rotational spelling with a moderate stocking rate emerged as best practice at these sites, with adjustment of stocking rates in line with rainfall and soil type recommended. In drought-prone environments, monitoring the presence and integrity of biocrusts connects landscape function and soil health. Biocrusts that protect and enrich the soil will support long-term ecosystem integrity and economic profitability of cattle production in rangelands.