Concept:
Heritage buildings are classified into different grades according to their historical, architectural, cultural, and regional significance.
The grading system helps in determining the level of protection and conservation required for each structure.
Generally:
• Grade I -- Buildings of national or historic importance.
• Grade II -- Buildings of regional importance with architectural or aesthetic merit.
• Grade III -- Buildings important to local significance and streetscape.
Step 1: Understand the meaning of Grade II heritage buildings.
Grade II heritage structures are those that possess:
• Regional importance,
• Special architectural character,
• Cultural or aesthetic value.
Step 2: Analyze the given options.
• Buildings and precinct associated with great historic event -- Usually classified under Grade I heritage.
• Buildings and precinct of national importance -- Also belongs to Grade I category.
• Buildings and precinct of regional importance embodying architectural merit -- Correct definition of Grade II heritage buildings. \checkmark
• All natural sites -- Natural sites are not classified under Grade II heritage buildings.
Therefore, the correct answer is:
\[
{\text{Buildings and precinct of regional importance embodying architectural merit}}
\]