Ok, so I am very familiar with doing internal insulation, in old buildings, because it's something I did in my own flat some time ago. Additionally it's something that I am sometimes involved with specifying or advising on as part of my work. What I did in my own flat is a bit different from what I'd usually advise in a work context because I was able to take some risks at my own expense.
Clearly you already understand the purpose of a vapour barrier, and know that it must be inside the insulation layer. And that the worry is that if humid air gets to places outside of the insulation layer then you can have problems with condensation and in particular you don't want that happening on any timber elements especially structural ones like joists & rafters.
Ideally the vapour barrier is continuous between walls and ceilings, and no humid air gets out of the internal space at all except by controlled means such as windows or extract fans. But, usually you try and do things so that if any does get where it shouldn't be, it's not completely trapped and can escape somehow. Hence ventilating unheated loft spaces, and keeping ventilation routes clear above rafters.
You are quite right that the small cavity between your insulation and your masonry wall is, basically, linked to the loft space. Also, that ideally it should be ventilated to some extent.
About that cavity ... there are various views about whether a cavity in that location is a good or bad thing. When I did my place, I chose to deliberately have a small cavity. The reason for that, mainly, was that I was also a little concerned about the brickwork getting saturated and not being able to dry out. That is, saturated from the outside, from rain, rather than from condensation from escaped internal air. Some people say that you should worry about this, some don't. I was doing pretty heavy insulation (150-200mm in places) and if that works properly, it should mean that very little heat gets through to the brickwork, meaning that the wall can't benefit from the drying effects of internal heating that will have been the case earlier in its life. So, my cavity is largely there to give the brickwork some opportunity to dry out from both sides if necessary. The cavity is "somewhat" ventilated. This means that it is open to the outside air at the eaves, and there are a few opportunistic small vents lower down, under windowsills and the like.
Some will say that you should put the insulation directly against the wall, because any air movement behind the insulation layer compromises the performance of your insulation. And I think this is what most of the insulation manufacturers advise ... but (at least, last time I looked at all this thoroughly) they also tend to advise only to add a certain amount, much less than I went with in my place. I suspect that might be due to the worries about the cold wall not drying out, that I mention above.
You mention the issue of what happens when the wall cavity meets the floor or roof joists. If you are really doing the job thoroughly, the insulation layer should carry on past the joists because otherwise you've got a gap in your insulation there. This is what I did, but I can tell you that fitting bits of insulation between and around each wonky joist in an old building is a lot of work. The most difficult bit is actually working out how to do the the vapour barrier at these points. Often, people don't bother with this and just accept it as a cold bridge to some extent. Potentially, you can just stuff some rockwool between the joists at these points, which provides some insulation and also lets the joist-ends breath somewhat.
Where you get the difficulty, as you have discovered, is when you have a cavity of some kind behind the insulation, and this meets the joist zone, because now you need to decide whether to seal the cavity above/below the joists, or try and make the cavity continuous (which is what I did).
I think the answer comes down to what you want the cavity to do. In my case, it was deliberate and its purpose was to give a low level of ventilation to the back of the brickwork (I wasn't too worried about the condensation aspect because I had done a very thorough, some might say obsessive job on the airtighness/vapour barrier layer). Also, because I was worrying about the brickwork getting damp, I was also worried about joist-ends embedded in it, so I wanted to the ventilation to be there at those points too.
If your cavity is not really deliberate, so it's not designed to ventilate, then I think you could seal it top and bottom, because you aren't wanting it to reach ventilation points higher up or lower down. Also, if your wall insulation is stopping at floor and ceiling levels, then I think you want to seal it because otherwise there's a route for humid air to get into it via those gaps around floor joists etc.
What's very important is that if you are going to ventilate that cavity or "let it breathe", then that must be by connecting it to the outside air and not the inside air.
It's true that too much air movement in that cavity will compromise the effectiveness of your insulation, which is another reason to avoid it if it does not have a deliberate purpose. (In my case, I was not so worried about this because it was only "slightly" ventilated and I don't live somewhere with very string winds. Also, it was behind a pretty thick layer of insulation).
Hopefully you are going to put expanding foam into all those gaps between insulation boards? Because you definitely don't want any opportunity for air to circulate through the thickness of the insulation.
That might not have entirely answered your question yet, because this is all a bit complex. So say if anything needs more clarification.
This whole issue is a bit of a tricky one. The truth is that there are certain things, no-one really knows whether we need to worry about at all. For example this question of brickwork getting damp and not being able to dry out. You can find academic papers which run simulations and predict it may be a problem in certain climates/locations. I actually have some monitors in my wall to see what happens. It's approaching ten years now and so far there's no indication of a problem. They get damper and drier on an annual cycle and the humidity in the cavity pretty much tracks the outside air. At the dampest point of the year, it's just edging towards the level of moisture content that could cause rot in timber if it didn't dry out again. So maybe it would be different for a different building in a different location with different bricks and mortar.
When i was doing this I went down a bit of a rabbit-hole on all of these questions. Try to avoid doing this if you want your project ever to be finished.
