Walls are part of buildings, and can be added or removed in Build Mode. Walls define rooms, and keep the inside in and the outside out - which is particularly important with Seasons. Some items, such as paintings, pictures, toilets, fireplaces, fire and burglar alarms need to be placed against walls. Walls can also be built diagonally which will give the house more interesting shapes. In The Sims 2 and The Sims 3, windows and doors can be placed on diagonal walls, but which was not possible in The Sims.
The Sims 2 allows either 2000 or 2100 wall segments per lot [1][2] before the game will not allow a player to add any more - half-walls are included in this limit, but fences are not. This limit has either been substantially increased or eliminated altogether in The Sims 3, though the upward limit (if any) is unknown.
Walls can be covered by paint, wallpaper, brick, stone, wood panels and siding, etc. to increase the mood of Sims. Walls not covered will give Sims negative moodlets[TS3]
References
This article needs a picture to illustrate what it is about. Find an image or upload one and add it.