An insult derived from the name of the much ridiculed Scotch Neanderthal barbarian William Wallace (portayed in the film "Braveheart" by Mel Gibson)..
The word is usually used to describe someone who has done something silly and made theirself look stupid, usually under the influence of alcohol.
Can also be used to describe someone who is an idiot in general..
"...is drunk, hes acting like a right wally"
"...he's acting like Mel Gibson.... William Wally"