We have all heard the stories of decks falling off houses. Build it right and you are not likely to become a statistic. The manufacturers of prefabricated materials all have strict requirements for installation. These instructions should be followed. These short walls are often left unbraced, contrary to code requirements.
All building materials expand and contract.
The manufacturers of building products often specify a gap be left between panels in order to allow for expansion. If your building material expands with nowhere to go, damage can occur. If these holes are not properly sealed before the application of wall, ceiling or floor coverings, potential problems exist in the event of fire. Fire needs oxygen to continue burning. Holes and notches are a perfect path for oxygen to be sucked from an area that is not burning to an area that is.