I appreciate your confidence in my knowledge on some subjects regarding home inspections, etc…but I’m getting a little red faced, however. 
I like the name of your url, Mark: apehomeinspection.com
(Which is All Property Evaluations)
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Block forms like these have been around for over two decades and have gained quite a bit of popularity over the last few years. It’s a great way to recycle leftover concrete and most ready mix companies sell them pretty cheap. The"keyway" is on four sides. When stacked offset like in the OPs picture they make a pretty strong wall. The one in the back ground of the picture I posted has a dirt burm behind it, and has been run into by front end loader many times, a couple dump trucks, and a D8 dozer. Never moved, lol.
If you look closely at the OPs picture, the elevated section on the left is sitting on a concrete footing and there is spillage of poured concrete at the end. I wouldn’t be surprised if the rest of that wall is sitting on a footing as well.
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The bottom row looks to be down in the ground about half the depth of the block. Unless I’m seeing things! 
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Most of it is that way. If you look closer at the bottom piece at the left, you can see where the concrete is stuffed off slightly. When these blocks are poured the forms are on their side, putting the actual top with the keyway on the side against the form. The sluffed portion visible wouldn’t happen if it were poured in a form. When I blew up the OP pic on my desktop, that’s how it looked to me anyway. It also looks like there is another wall closer to the camera at a different angle that the blocks were connected to, hence the visible spillage. I bet the builder had a gap between the two walls that they filled with concrete.
They interlock, but I’m guessing there’s enough space between them to allow the area behind them to drain.
From DESIGN OF COASTAL REVETMENTS, SEAWALLS, AND BULKHEADS, U.S. Army Corps of Engineers, Engineer Manual No. 1110-2-1614
“The massive monoliths and interlocking blocks often exhibit superior initial strength but, lacking flexibility, may not accommodate small amounts of differential settlement or toe scour that may lead to premature failure.”
My understanding is that what prevents toe scour and eventual undermining resulting in differential settlement is installation of a riprap toe berm made from stone of sufficient size to resist movement from expected water velocity during storm events.
Don’t step into a trap…
Anytime there is a critical retaining wall such as pictured, defer it. Do not put in your report “the wall is performing”, satisfactory, or similar some such. Even if it has not collapsed, straight, no signs of leaning, etc… if you do not defer it, you’re telling your client that you have inspected it as an “expert”. If you were an expert, you would not be here asking questions about it 
Think about it! Too much liability in this wall to not defer it to an expert. If you do not know when to defer… ask yourself this question: if a potential client called today to specifically, and only, inspect this retaining wall because another inspector deferred it, would you take on the job? would you take on the liability? how much would you do it for? Did you adjust your home inspection fee to cover the extra liability for this wall? Something to consider.
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I’ve seen similar walls shift like that from poor drainage or tree roots nearby. You might want to check for weep holes or signs of soil pressure behind it.