1x4 let in bracing

When are they needed? I thought they were needed across exterior walls such as this one below in the garage. I know they are in detached garages?

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Depends on type/sheathing material that is secured to the wood framed exterior walls. Let-in diagonal bracing is used with nonstructural sheathing to provide lateral resistance to a light wood frame. Prescriptive codes still allow: 1″x4″ diagonal bracing, diagonal board sheathing and plywood sheathing as wall-bracing options.

I agree with Claude. 2006 IRC says:

Thanks Claude & Mike. The wood structural sheathing board was installed on the exterior side so it’s ok.