1. At position 0.53 the narrator mentions 2.5D digital matte paintings. I cannot seem to get a simple answer online for what is the definition of this term.
There is none. From stacking layers and using parallax to using projection mapping and projection painting techniques as well as things such as height fields to generate depth from 2D images to using genuine 3D rendered elements in native 3D space this can include anything. It's a fashionable buzzword that covers any number of tools and techniques.
2. At position 1:09 the narrator says that the digital matte paintings were CG based. What exactly does he mean here? I know that a digital matte painting is one that was painted with Photoshop etc. on a tablet or computer by an artist but what is a CG based matte painting and and how does it differ from the traditional artist computer painted regular digital matte painting?
Same as above - they could have rendered out e.g. individual rocks and trees as separate elements and slapped them together in a 2D program, with teh more advanced version of it again being using multipass rendering to fire out depth info or geometry normals to allow dynamic relighting in 2.5D using respective plug-ins and programs. For AE once there was a plug-in called Normality that basically did this.
Great information you provided, thanks!