stamp 2 parents have a baby in Ireland

Theoritical question: If two non-EEA/EU/Swiss nationals who are both on a Stamp 2 stamps have a baby in the Republic of Ireland, what is the baby's immigration status?

For the removal of doubt, neither parent has enough reckonable residence in the last 4 years to enable them to apply for an Irish passport for their baby.

I take it they just go to their Embassy, apply for a passport for their baby (assuming their country's laws allow the baby to be a citizen of their country by way of birth abroad), and then they apply for an immigration stamp on that passport? Which number stamp would the baby be eligible for?

Child would inherit nationality from parent(s), if, as you say, provision is made the parents' country's nationality law(s).

Children under 16 are not subject to immigration control. Child would be eligible for Stamp 3 on their 16th birthday, assuming the parents are still on Stamp 2.