Diabetics with type 2 first goes through a fase where insulin fails to control blood glucose levels (if you have allot of glucose in your blood, this is sensed by you pacreas and it secretes insulin - a stubstance that signal to the other cells of your body to start absorbing the glucose, and thus reduce how much is circulating). After enough time in this state, your pacreas gives up and stops producing insulin, much like in type 1. So it has two stages.
Autoimunity might be a hypothesis (does type 2 diabetes respond to immunosupressants? Do you have states where antibodies conversly increase uptake of glucose from the blood w/o insulin?), but I think the prevailing idea is that fat accumulation in muscle cells interferes with a signaling pathway that originates in cell membrane fats (the IP3/DAG pathway), making it less efficient. Think of it like wire that is loose and only occationally gets contact. The signal is supposed to convey the fact that insulin is present from the surface of the cell into the cell, where glucose transporter (GLUT4) is to be mobilized to the surface of the cell and start taking insulin out of ciculation and into the cell for storeage and burning. If the signaling pathway thus breaks, this manifests as less effect by insulin, and the body compencates with increased levels over time, and eventually burnout of the pacreas.
If accumulating fats are to blame, it might also explain why a negative energy balance (starvation) would help. Fat is the main energy store of the body, and it might get burned off, restoring normal insulin sensitivity.