Three groups were sitting outside the Royal Daylesford Hotel on Sunday when a BMW SUV mounted the kerb and hit patrons.
The 66-year-old driver from Mount Macedon remains in hospital and was interviewed there on Tuesday.
Police have not laid charges, with their inquiries to continue once he's released from care.
Lawyer Martin Amad said the driver was an insulin dependent diabetic who required immediate treatment from paramedics at the scene.
He noted his client was a family man with no criminal history and he returned a negative blood alcohol reading following the collision.
"He is deeply distressed and feels great empathy with the families and friends of the victims and the Daylesford community," Mr Amad said in a statement on Wednesday.
Mr Amad reiterated the man had not been charged with any offence and the investigation could take some time.
Migration agent Pratibha Sharma, 44, her nine-year-old daughter Anvi and partner Jatin Chugh, 30, were among those killed in Sunday's crash.
Ms Sharma has been remembered as a selfless, community-oriented person who volunteered with Australian Sikh Support from 2020 to deliver food boxes to people quarantining and students facing hardship during the COVID-19 pandemic.
She had run for state parliament and local council and was admitted as a lawyer in June.
Migration agent Pratibha Sharma was among five people killed in the crash.
A 38-year-old Tarneit man, named in media outlets as Vivek Bhatia, and his 11-year-old son were also killed.
His 36-year-old wife Ruchi Bhatia and six-year-old son were hospitalised.
Friends of Ms Bhatia have set up a fundraiser for her and her surviving son and said the happy family had recently bought a house after becoming permanent residents.
An 11-month-old boy was injured but was discharged from hospital on Tuesday.
The baby's mother was not injured, but a 43-year-old Kyneton woman and a 38-year-old Cockatoo man with them were taken to hospital. The man was also discharged on Tuesday, while the woman remains in a stable condition.
Hepburn Shire Council Mayor Brian Hood said the tragedy was being felt throughout the community and beyond.
"The community grief was palpable at (Monday's) vigil in Daylesford. It was very moving to come together in this way," he said in a statement.
A second memorial service will be held for the victims on Wednesday evening by the local Anglican, Catholic and Uniting churches in Daylesford.
The five deaths were among the 13 lives lost on Victorian roads over the Melbourne Cup long weekend.
There have been 251 fatalities so far this year, the highest road toll since 2008 when 256 lives were lost at the same point of the year.
