The walls will be tiled all the way around the room up to chair rail height. The contractor puts up a ledge that is perfectly level and about 1 tile high above the floor and adds tile above that ledge. This makes sure all the tile above that first row are level. You then go back and do the bottom row and make the cuts appropriate to the unevenness of the old floor. In the photos you may notice that the trim row is a gray as opposed to white background. This helps finish off the look, particularly when the tile is patterned rather than solid, but it is also done with solid color to make an accent. This is more of a vintage look.