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Looks like two coat full plaster over plasterboard. It was kind of a drywall product intended to be plastered over. The gap is where it was attached to furring strips to get it out away from the block wall. The first thick layer is the scratch coat and then one or two more layers were put on of hard finish plasters.
To decide what to do to fix it photos from back a ways would be needed showing the problems. I would always try and repair original plaster walls before taking them down and doing drywall. But if you need major work done like new wiring or such it might be the cost effective way to go.
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