The Walls hold your Fortifications. Each fortification takes up wall space, listed on the Fortifications page.
Requirements
Walls need a Quarry at level 2 and a Workshop at level 1. Raising the Town Hall to level 3 or higher needs Walls two levels below it.
Downgrading
Downgrading refunded 25% of the cost and took 25% of the time, as seen on one level so far.