The gaps are pretty unnoticeable until you get closer. I would have had them bigger but felt it didn't look quite right up close (i.e. when sitting on the future patio) and also nervous about increasing exposure of the membrane to the elements. Ooh good to know, yes it will be interesting to see how the gaps behave at different levels of moisture.
It is a timber frame and yes there are counterbattens to bring it out to the correct depth for the windows. The first floor is bigger than the ground floor though, so on that elevation pictured, the upstairs overhangs by 60cm. At the front it's just over 2m.