I would either tile only the back wall, or tile to the edge of the wall and do a bullnose at the top edge after the cabinet runs out. Hope that's helpful!

Tile the back wall only. There’s no need to tile the side wall, and backsplash tile ending at a corner looks better, in my opinion.

Note: worried about wetness if the side wall isn’t tiled.

Leave the side wall as it is and how will it get wet anyway/

I would bring the tile out to the edge of the wall and top it with small trim tile.

I agree with felizlady - I have a similar situation in my kitchen and opted to tile the side wall to the height of the backsplash, then trim the top and front edge with a pencil edge tile - I still am happy with that choice 5 years later. I think it is the more finished look of your 2 options, and does not add that much expense or trouble to complete in this way. Good luck with your job !!

No sidesplash.

I would not do the side either. I have my dishwasher in a similar position and it does not get wet. You can always place a dish drying mat if you use that area to place wet dishes.

Do you have baby otters swimming in your kitchen? If it gets wet, wipe it off, just like any other surface.

It is simpler just to do the back BUT if you really want to put the tile on the side wall also, and find there isn't bullnose available, here is a suggestion someone shared with me once: the edge of a ceramic tile will be rough if it is cut but it can be ground smooth with the right kind of tool (stone type not metal) to look a little more finished.