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Why the 2" gap in the end?
Because
Condensation will always be a concern between the colder exterior wall and the warm interior boarding.
Airflow stops this. It's the same principle for insulating a cold roof.
I guess breathable insulation might mitigate any condensation problems, but I'm (lacking any real world experience of it) somewhat circumspect.
When I looked at it, sheep wool and wood wool boards came out as the way to go. You would need to be sure that the wall is still breathable though (lime plaster inside, lime render outside).
Condensation will always be a concern between the colder exterior wall and the warm interior boarding.
In the end, I went with a 2x2 stud wall, with a 2 inch layoff from the exterior wall, to allow for airflow from the airbricks under the floor level to the airbricks in the ceiling void.