So recently I have allowed myself to have a pudding after a meal, 3 times in fact and each time the next morning when checking my bloods they have been at least 2 points lower. So my question is this does eating the sweat pudding trigger my own insulin production thus improving my glucose levels?
I don't think you can draw that conclusion. By the time you get to the following morning it's probable that the impact of what you ate maybe twelve hours before is undetectable. Question - you say "two points lower" - two points lower than what?
Second question: what else did you eat as well as the pudding, and in particular did you have any alcohol?
The normal testing regime to find out the effect of food on your blood glucose is to establish a baseline, by testing immediately before you eat, then to test two hours after finishing. Everyone's blood sugar, (diabetics and non-diabetics alike) will rise following a meal containing carb or sugar, as the food is digested. The blood glucose rise normally happens within a few minutes. Over the next two hours your insulin response should move the glucose out of your blood and put it somewhere else - ideally muscle cells, but often into fat cells. Any not stored will stay in the blood, and will show up at the two hour test. the more there is, the less well your system coped with that amount of glucose.
I guess it's possible that your pancreas greatly overproduced insulin the previous night to deal with the sugar high and together with your medication this might just produce a lower figure the following morning. It's also possible that your liver did not top up your blood glucose in the morning because of the previous intake.
So you have potentially a short-term problem by generating a seriously elevated glucose level for most of the previous evening and night (you don't know how elevated, because you didn't test), and a slightly lower level the following morning. I would not find that acceptable.
The other thing is that as a T2 on medication continually stressing your system by overproducing insulin may not be a good idea in the long run either.
Your choice in the end, but I wouldn't go there.