According to Wiki

Retaining walls are relatively rigid walls used for supporting the soil mass laterally so that the soil can be retained at different levels on the two sides. Retaining walls are structures designed to restrain soil to a slope that it would not naturally keep to (typically a steep, near-vertical or vertical slope). They are used to bound soils between two different elevations often in areas of terrain possessing undesirable slopes or in areas where the landscape needs to be shaped severely and engineered for more specific purposes like hillside farming or roadway overpasses.

Here is a very cool graphic explaining the types of retaining walls

Homeowners may want to build a retaining wall on their properties for several different reasons. Retaining Walls can be built of wood, rocks, bricks or concrete, with its main purpose to hold back some level of dirt and soil away from your home, garden, pool or play area. It can also be something you want because of the beauty of retaining walls. If your yard has alot of rolling hills or a sloping yard, a retaining wall will give you with more usable land which in turn adds to the property value of your home.

Retaining Walls Hold Back the Earth From Doing Damage You may have found that perfect piece of property but the home is built on a hill or in a valley between several hills. By hiring a professional landscaper to build a retaining wall, this will hold back the earth from falling into your new house.

Retaining Walls Add More Usable Land to Your Property As a homeowner you may want to add to your property value by installing a patio, a playground for your children, a walk-out basement, a garden or even a pool. If your property is on a hilly terrain this addition is impossible unless the ground is level. By building a retaining wall you add more usable area as well as beauty. If you put in a pool, your retaining wall can also be used as steps into yourthe pool, or a place to hold your outdoor equipment.

Retaining Walls Keep the Ground from Washing Away If your area gets a lot of rainfall or if you live near water, like a lake, a retaining wall will help keep the water from eroding the soil of your landscaping and around your foundation. This can also be a safety measure to prevent mudslides and rivers of dirt from floating toward your home.

Here are some of our custom retaining walls