Can anyone tell me what this is and tell me if it is a defect?

Let’s use your Not Chuck Texan logic.

This is from my Monday inspection.

According to you there is no defect because the bored holes are installed properly per the NEC, 300.4(A)(1).
(1) Bored Hole s. In both exposed and concealed locations,
where a cable- or raceway-type wiring method is installed
through bored holes in joists, rafters, or wood members, holes
shall be bored so that the edge of the hole is not less than
32 mm (11⁄4 in.) from the nearest edge of the wood member.

I used
8

Good thing that Nick got free access to ICC documents so that you can finally see where I get my FACTS.

Functional Idiot vs Not Chuck 100 - 0 keep trying