If your wall is no good painting it will show even more. wall paper will overcome this problem. You need no even wall with wallpaper. No need to sand. If you want to sand it why not plaster it cheaper with fine plaster power white in colour.

The paint peeling off from bottom is becasue of moisture water being suck up by capilary action. Painting and wallpapering will have problem. Apply waterproofing cement slurry coating up 1 foot above the problem area. It wont add up a thick layer like plastering but a thin coat of cement, apply it like painting. You can use Sika top 107.

With proper papering the edges wont peel off.

Once tiled that is you can never change it as it is too expensive to re-tile, moreover if one piece is broken you cannot find another same pattern after the batch no longer in manufacturing.

Taking off wall paper is easier than taking off tiles.

In conclusion:

paint when your wall is smooth.

Wall paper when it is too expensive to cover the uneveness of your wall.

Tile is for floor, toilet wall and kichen wall.

In such cases you got to do

Skirting with tile or any skirting is ok if the skirting is high enough to cover the peeling areas. Better check, otherwise, do water proofing easier and cheaper. Remember, when water cannot come out of surface it goes further up as it accumulate!!! That is why I said waterproofing it one foot above the problem areas. Skirting usually only few inches like 3 to 4 inches only.

Allow me to give you a better understanding. Concrete breath! Water cannot go thru concrete unless it is very porous and thin. But water vapor can. If you pour some water on the floor by tomorrow the pool of water is still there with some evaporated. If you use a plastic sheet covering a bear concrete floor overnight you will see some water on that floor area and/or underneath the plastic sheet. Where these water come from? From the floor underneath via water vapor. The water vapor will travel thru the concrete up to the surface and since there is a plastic sheet it condensed on the plastic sheet. That is why people say it is not good to sleep on a bear concrete floor. You get "foong sap" or wind-water or "masuk angin".

Why certain part of the bottom of the wall get so much water and some less or none?

1. The area underneath receive a lot of water
2. The wall concrete is too porous with too much sand and too little cement and same to its plaster.

The other area not that they do not have, it is because the water vapor was so little it passed thru the paint or wall paper without condensation (or have no chance of condensation and passes thru the paint/wall paper and/or condensed but then re-evaporated quickly.

By applying a layer of waterproofing do not mean the water vapor cannot get thru. Water vapor will still get thru but much less and so little that there will be no condensation.