Know how to use "fewer" and "less"? Find out.
1. A file containing a listing (e.g. assembly listing) or a transcript, especially a file containing a transcript of all or part of a login session. (The idea was that the paper for such listings was essentially good only for wallpaper, as evidenced at Stanford, where it was used to cover windows).
The term is now rare, especially since other systems have developed other terms for it (e.g. PHOTO on TWENEX). However, the Unix world doesn't have an equivalent term, so perhaps wallpaper will take hold there. The term probably originated on ITS, where the commands to begin and end transcript files were ":WALBEG" and ":WALEND", with default file "WALL PAPER" (the space was a path delimiter).
2. The background pattern used on graphical workstations under the Microsoft Windows graphical user interface to MS-DOS.