Shingle siding issues

Hi out there, I ran into this shingle siding issue. Obviously the hole is a material defect but I’m actually a bit perplexed by how this siding was installed. This hole is roughly 20 feet up the side of the house. The shingles at that level are mostly degraded to the point where you can see through them. The close up photo is taken from the roof looking down. It looks like there is no sheathing or membrane behind the shingles. It’s just a 2” space between the back of the interior wall separated by framing. Not an area with large populations of squirrels/critters either. Anyone seen this before? Thanks

What is the white wall there? Is that block or an interior wall? Hard to tell from photo.

gypsum board w/paper peeled from direct uv & h20 intrusion

It’s really difficult to get a ladder up into that space due to proximate of the homes. I’m guessing it’s the interior wall based on the thickness. Either way though would this be an improper way to install shingles (with a 2" space behind them)?

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An air gap or space between siding and the exterior wall is called a rain screen, a belt and suspenders method to keep water away from stuff that needs to be kept dry.