Landscaping hillsides is a challenge. Retaining walls to prevent erosion and create level planting areas are a common way to deal with the problem. Managing surface water requires proper planning and a good drainage system.

Here in earthquake country, retaining walls of over three feet require engineering, so the solutions I'm posting are for walls below that height.

The engineer on a recent job told me he did not require drainage behind an earth filled, dry laid stone wall (less than 3') because the gaps between the stones allow surface moisture out and disperse its force. A timber or concrete retaining wall is subject to hydrostatic pressure...the build up of water laiden soil behind the wall. To prevent this from happening and blowing out the wall a perforated pipe is laid inside a geotextile fabric "bag" filled with 3/4" drain rock at the bottom of the wall or slightly lower. Weeps through the wall and hooked to the drain pipe allow the water through and disperse large flows. If there is a natural declivity that collects water a larger pipe is required to divert and control that water. That level of drainage must be designed by a civil engineer. Alternatives to the filter bag exist. Caltrans, our highway department, has engineered a permeable fill that does not require a filter bag. Caltrans Class II fill is dropped in the trench, pipe laid and topped off with the Class II. Concrete retaining walls benefit from the use of a weep fabric, a plastic, dimpled moisture barrier that is covered with geotextile filter. Waterproofing mastic is placed on the back side of the wall and then the drain mat is attached to the vertical surface. The same pipe and drain system goes at the bottom of the wall. Water hitting the drain mat runs down the wall and hits the pipe. If dispersing the collected water is not a good idea, say there is a neighbor below or your house would be on the receiving end, terminating pipes well outside the living zone is an option. A rock lined basin and a 'tee' fitting at the end of each pipe to disperse the water force is a good idea. We don't use flexible perf pipe. The stuff fills up with silt no matter what and the clean out risers we install for drain snaking do us no good. All hard pipe is good, perforations down! Hope this helps!