Hallowed Walls are naturally-generated background walls that have been taken over by the Hallow. These naturally occurring walls can be destroyed with a hammer, but will drop nothing. These walls also do not stop enemies from spawning and cannot be used for proper housing.
Some cave walls can be converted into hallowed walls: Mottled Stone Walls become Hallowed Shard Walls, Fractured Stone Walls becomes Hallowed Crystalline Walls, Worn Stone Walls become Hallowed Prism Walls, and Stalactite Stone Walls become Hallowed Cavern Walls. Using a Clentaminator with Green Solution is the only way to reverse the conversion.