This then would be for ventilation, and when water entered it would drain out somewhere below, similar to the vents in cars. The Ark was to be coated inside and out with pitch. It was more likely some resinous material used not only to waterproof the vessel but also to prevent decay. The need for this preservative was essential. It is also possible that things did not decay as rapidly in the pre-flood atmosphere.
Most english translations translate as in the former.
Large boats are still made from reeds and are very seaworthy. The Egyptians still use reeds for caulking their wooden ships. 50 cubits wide and 30 cubits high. A cubit in the OT was generally about 17.5 inches. However, an Egyptian royal cubit measured about 20.5 inches.