It must be covered, not necessarily replaced. It depends on the finishing.

What kind of sheathing? What kind of exterior finish?

The sheathing is green board and the finish is cedar clapboard.

What is "green board" sheathing?

I believe it is a type of board that is supposed to be moisture resistant.

Gypsum-core or wood? There should be strapping and a housewrap over the sheathing as well.

Here is a link that might be useful: How to Install Cedar siding

If it is the moisture resistant gypsum wall board made for use in interior damp areas and sometimes called "greenboard", it is not acceptable for use on the exterior of a building by any recognized standard.

If you wish to use a gypsum sheathing product many manufacturers make a board specifically designed for use as exterior sheathing. When it has a paper face it is usually dark gray/brown. It is supposed to be water resistant but if you put a sample of it in a bucket of water it will turn to mush so the edges must be very well protected from moisture. All gaps should be sealed before any underlayment or housewrap is installed.

A far better material is DensGlass Gold by Georgia-Pacific which has a yellow fiberglass mat instead of a paper face.

Who was responsible for designing the exterior wall system?

I think by greenboard the OP means that new sheathing I've been seeing everywhere. It looks to me to be OSB covered with a medium green Tyvek-type product. It wasn't around when we built a few years ago.

A 6" gap is unacceptable.

Huber makes a green acrylic coated OSB sheathing that does not require a weather/air barrier. Since it has the word ZIP written all over it and the joints must be sealed with tape I doubt that is what the OP is describing but you never know.

It remains a mystery to me why so many people on forums use slang or made-up terms to describe building materials rather finding out the real names. It just makes it difficult to answer their questions.

This greenboard?

Good work Worthy. Foam insulation board would explain how it could be accidentally punctured. Calling it "greenboard" is a poor choice for the US market in my opinion.

I would say that damaged panels should be removed back to the closest stud and new ones installed that span from stud to stud rather than just patching it.

It should all be in the manufacturer's installation instructions and/or specifications.

I think that stuff is expanded polystyrene foam board that is part of an EIFS offered only in Australia. The plot thickens.

Yep, I got sucked into the press release, which said it is "a system" used in North America.

Not much value for residential, in my view as it says it has a "serviceable life of 30 years in typical Australian conditions." Hmm, would that be the life, too, of EIFS in North America. Unvented, for sure!

No, "worthy", it is not that type of board. Sue36, I believe you got it right because it basically looks like typical plywood from the inside.

And over the last couple days they did finish closing up the gaps as well as fix the hole. I was asking because the contractor was looking for me to sign the requisition for a disbursement that said all framing and sheathing was complete.

If it's ZIP wall sheathing it would look like typical OSB from the inside. It is probably better to ask your builder these questions since he would know what you are talking about.