Poured concrete structure with Traco hopper style windows and fixed.(metal frame).
Observed gap at each one between frame and interior walls in the unit ,with a felt strip shoved in.
gap looks ugly , but seems to be intentional.
Assuming that is a drywall return, Yes that is intentional. In my former career, I did many that way, about 1/4 in is sufficient, to allow for the difference in expansion and contraction, and prevent condensation transfer.
Post script, Your right, it is ugly, and the job is not top notch.