Looks like it might be a basement. Up here, we'd do that just in case of expansion. I wonder why the 1/4 round moulding doesn't go all the way though. That looks a little odd.
My house I had back in Michigan had a fully finished basement. I left my drywall about 1-1/4" from the floor, used 1x4 that had 4 coats of polyeurethane on all sides for baseboard, just in case I got some water. Also put ceramic tile down instead of carpet. Worked great, got water twice and it took nothing more than a couple of hours with a squeegee and some bath towels to clean it up.
Lolz! The gap was left to put the floor in. The contractor who built my house sucked.
That's why I've always done my own work. I hate gaps in trim work, and I like stained trim. I've thrown lots of it away and cut more just because I wasn't satisfied. I built my own solid oak raised panel wainscoting in my Michigan dining room, took forever and took lots of compound miters. Ended up doing it one piece at a time, rough fit 2 pieces and nail the first one in. Rough fit the next 2 and nail the next 1 in, and so on. Turned out really nice though.
I'm on a crappy split shift this week. I fired one of my night shift horizontal mill operators, I still need the mill to run, so I'll work noon-10:00 for a week or so and run the machine myself after the day guy goes home, until I get the position filled. I see an advantage or two, I can squeeze in some morning rides, and maybe even a nice later night ride or two.
I saw someone with that exact same bike, in the same color, on yesterday's goofy Halloween Cruise bike ride. Check out these bikes! I believe most of these are the epitome of "Off Camber" bicycles, as they definitely aren't mountain bikes .