The Palace Walls is a rather misleading name for this small area. This area is actually outside the city of Agrabah, and thus outside the walls surrounding the city. Out here, there is a small oasis, there's some nice, lush greenery, and multiple paths in which you can take. The first path takes you out into the Desert area. With a certain magic carpet's help, one can reach the Desert: Cave of Wonders area. Finally, the last remaining path takes one out into the Sandswept Ruins, though only one or two people at a time can ride through this area on Carpet.