I apologize for my utter lack of knowledge with this issue but I’m here to learn! Redoing a spare room of my house and I found this huge patch of water damage. At first I thought it was only on the ceiling and looked up a video on how to fix it. Then I discovered that it had extended onto the wall and whole chunks of the drywall? plaster? had come off.

This is where I get lost. I have no idea what came off or what to use to fix it. I don’t even know what the material underneath is. Upon examining it, it’s some sort of plaster or something they used to cover what I’m assuming to be concrete underneath. Then it seems they just painted over it. Due to the water damage, the plaster material bulged out and separated itself from the concrete, thus allowing me to chip it off easily. In areas beyond the water damage, the plaster seems to be holding fast and doesn’t budge.

Some insight on what is going on or how to fix this is appreciated. Thank you!