I work in construction, and I'd have to say that's an unpainted/unfinished space. Basically, when you put up a wall, you set the studs, then screw the sheetrock to it. It comes in big 4x8 sheets, and you typically just set the whole sheet up and screw it in place against the studs at regular intervals (you obviously cut the sheets into smaller sections for areas where you don't need a full sheet). Then you'll take sheetrock mud (it's literally a powdered form of the same stuff they make sheetrock from, mixed with water to the consistency of mud) and apply it to the screw heads with a trowel. You end up "floating it out" over a larger surface than the screw head, the end result being a smooth wall that looks uniform when painted. You'd do the same to the linear joints between sheets, but Jeph may have just not known or cared to show that much detail.
Edit: I'm not sure if this board has the capability to upload images, otherwise I'd post an example, but if you Google "unfinished sheetrock wall" you'll see what I'm talking about under the Images tab.