4" isn't enough to sit a garage on even away from seismic. Need 6" around under the structure here in middle canukistan.

Yes, exactly. The only downside is those breakers are pricey.

Easy solution is to put the lights on the arc-fault breaker, nothing wrong with it that way.

Won't be to code in a lot of places as lights are on standard breakers and often outlets need to be arc-fault protected.

Could work tho.

That happened because the concrete curb was wider than the wall at those points, or because the whole curb was slightly oversized and whoever built the garage didn't want to make a 1/2" adjustment to make the outside walls sit flush with the exterior curb. I bet where the wall is flush on the inside of the garage either attaches to the house or has some funky siding issues outside.

That's something you needed to address before insulating/drywalling - as it is all you can really do is scribe out some filler and put that in behind the baseboard. It will look weird.

Consider some built-ins for that wall instead. Cabinets, etc, will hide that.

Make the builder fix it, stop paying them until they do.

As a design decision, this sounds wonky and weird. Most backsplashes sit out from the wall. Trying to get that to sit flush and have the edges not crack is problematic, at best. Tiles and plaster expand differently with heat/moisture, which will lead to cracks.

Cracks aside, getting that to look nice when finished... that's just not going to happen.

Consider a pair of shower rods, or any decorative post you can cut a little shorter than the height of your space and then put shims under. Then you can tie around, drill through, whatever you'd like.