For those who do not know, a retaining wall is a wall at a slight angle to hold back dirt similar to how a dam holds back water. If you look at how building is in LiF, you'll notice that many players opt to place their fortifications right behind, in front of, or flanked by an extreme slope. However, said extreme slope tends to be an eyesore due to stretched textures or jagged edges. There was a time when this was abused to make infinite falling traps, but ignoring that use of terrain geometry the extreme slopes are generally used to gain more height for your walls.
Retaining walls are visually appealing for making those sharp slopes no longer an issue for building. While a stylistic choice that wouldn't need to be used or mandatory in any way, you could use this construction to mimic terrace farming on hilly terrain. Doing so would keep the rustic look of the game while keeping the balance of having one permanent structure or plant per cell.
If you wanted to take the idea a step forward, you could allow the use of these retaining walls in conjunction with the building system, to allow certain buildings to utilize the extra space from the use of the wall. Similar to having a flattened area on either side of a perfect slope, you would now be able to have a retaining wall on the slope giving you an extra tile of usable flattened space! In the creation of a city, having as much usable space as possible is imperative to intelligent design.
With the ability to make more efficient use of space there obviously must be some limitations. Such a construction would be able to be make of planks or shaped stone, however the prior would not be able to hold back as much of a height difference in material nor would it be as durable as its masonry counterpart. If the addition of building above of a retaining wall's tile was implemented, it would need to be mason-made to withstand the weight of a building or large structure. Just an added thought; the wooden retaining walls could be utilized in open quarries to fortify the walls from caving in, similar to the logs we put in the shafts now.
I had some pictures to go with this but the spam filter is denying any and all of my URLs. Just Google 'retaining wall.'