The boards on the back of the knee walls are there to prevent air washing. The natural air flow through the attic actually degrades the performance of the (fiberglass) insulation. The boards can be just about anything. (OSB, plywood, thermaply, etc.) Keep in mind that if your insulation has a vapor barrier on the heated side then you want to stay away from any backer boards that also provide a vapor barrier as this could trap moisture in the wall.
One more thing........If you have knee walls then you probably also have some angled ceilings as well. Those should be at least R19 which which generally means you will have to fur down the rafters in order to have enough space for the insulation and the 1" baffle.
OK..two more things........take time to caulk or foam anything that can't be insulated such as bottom plate to the subfloor, corners, anywhere two studs are nailed together, around outlets and light fixtures, etc. It's amazing how much this helps. On the average house this adds up to one window left open 24/7/365.
Hope this helps.
Wise words regarding the ceilings...we have the start of a bonus room in our attic, but the previous owners did not fur the rafters, and there is no space between the roof and the insulation. As a result, for me to finish the room to code, I need to rip down the ceiling and install a new one.
If you never plan on selling the house in the future, no need for permits, but I would think to ever count this as extra square footage (meaning more $$), you'd want to get a permit.
