Wall tile needs a flat, even surface to adhere, or gaps under the tiles can occur, causing eventual loosening. If you have an old plaster wall with dips and depressions, it is important to deal with that before you tile. Skim-coating the wall is the process of filling those depressions with joint compound so the wall is smooth.
Spread joint compound over the dips in the wall with a dry wall knife. Fill the dips and get those spots even with the rest of the wall. Keep the compound very thin, using multiple layers if necessary, letting each layer dry for four to six hours before applying the next.
Sand the wall smooth. Cover it with sealing primer, using your brushes and rollers.
Draw a horizontal line along the base of the wall with your level and pencil, up from the floor by the height of a tile plus ¼ inch. Draw a vertical line through the middle of the wall, intersecting the horizontal line.
Spread tile mastic all along the base of the wall, from the floor up by a few feet, covering the horizontal line. You will still be able to see the line.
Press the courses of tiles in place, starting at the bottom row and working up. Begin each row at the centre vertical line and build to the sides. Put spacers between all the tiles. Cut the end tiles as needed to fit at the ends. Add more mastic as you proceed up the wall. Do the whole wall.
Let the mastic set overnight. Pull out the spacers.
Spread grout over the wall from the top down, using your grout float to force it into the spaces between the tiles. Use a dampened sponge to take up the residual grout from the surface.