1) Normally, you have a small gap between all the bottom boards (which is then covered by a cover board or rib). This gap provides a number of small ventilation holes between the different compartments created by the horizontal nail battens. If you have a covered eave, the façade space is ventilated through the sparse paneling.
2) Very small amounts of moisture penetrate a painted façade in good condition if it is not in a particularly exposed location. Those who are "super meticulous" create chamfers and drip noses on the nail battens. But I would say that good ventilation goes a very, very long way, in normal cases and with a good roof overhang.
"In locations exposed to driving rain, it is advisable to attach vertical ventilation battens or spacer boards of, for example, 8 mm board between the nail batten and wind barrier to secure ventilation and prevent water on the top side of the nail batten from penetrating and damaging the wall construction. This is especially important for board-and-batten and tongue-and-groove paneling. In the case of the cover panel, ventilation is considered to be provided through the construction itself with paneling and nail battens. In cases where special battens or spacers are used behind the nail battens, the thickness of the nail battens on site-built exterior walls should be at least 34 mm to ensure the battens can be tensioned freely."
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