This is a great question but not an easy one to answer. The first thing is that very generally speaking, T1 do not produce any insulin (holding off on the 'honeymoon period question) whereas for T2 it is different. Some with T2 produce so much insulin in response to high levels of blood glucose but if they lower their bg levels by changing their dietary/excercise regime they can maintain better management and not have to use drugs or insulin.
For others who have T2, no matter how they change their regime their levels remain high so they are prescribed bg lowering drugs. And then there are those whose pancreas' fail to produce insulin in sufficient quantities due to 'clogging up' with visceral fat and for other reasons so they have to use exogenous insulin.
This is an oversimplified explanation and doesn't cover everything but I hope it helps you to understand a little better.
As to basal/bolus question, I will leave those T2s who are on insulin to answer as I am not on insulin.
