Gfilui

All is said in the title , I want to replace all lines between two patterns with a a file content.

file1

line 1
line 2
foo
foobar
bar
line 6
line 7

file2

line 3
line 4
line 5

desired file

line 1
line 2
line 3
line 4
line 5
line 6
line 7

Tried many sed commands nothing works for me , closest command below successfully matchs lines between foo and bar but replace them with "$(cat file2)" string and not file content.

sed '/foo/:a;N;/bar/!ba;N;s/.*n/$(cat file2)/;p' file1

You are close, I think - your main issue is that $(cat file2) is going to be treated as literal within single quotes - you should be using the built-in r command:

r filename

Queue the contents of filename to be read and inserted into the output
stream at the end of the current cycle, or when the next input line is
read. Note that if filename cannot be read, it is treated as if it
were an empty file, without any error indication.

So:

sed '
 /foo/
 :a
 N
 /nbar$/!ba
 r file2
 d
 
' file1

If you want to wrangle this into a one-liner there's a trick you'll need to prevent sed from treating everything after the r as part of the filename:

sed -e '/foo/:a; N; /nbar$/!ba; r file2' -e 'd;' file1