Hi nathen, I'll answer your question as best I can. But I'm no dentist :p...

So what fills the gap is bone, the teeth in the bone would usually be surrounded with cartilage and soft tissue and this would ossify.

As for why we have two set of teeth. It's quite common in nature for teeth to grow in sets, with one set pushing out the next in a continuous cycle. I guess for some reason humans only get that cycle once, and have to make do with our adults teeth for our whole lifes!