Let me start by telling you that you have a beautiful garden! I brought in the expert to look at your question and offer an opinion, the hubby is a bricklayer and has plenty of experience with retaining walls. You, unfortunately, have way too much soil that needs to be held back to prevent the wash out that will occur without a full retaining wall. The terraces would erode rather quickly if you just had retaining blocks stacked loosely. Their strength is in having them stacked tightly with the gravel interlocking them. Sorry to disappoint. Good Luck, Tracy & Ed

After 1971 quake in San Fernando area my dad talked to man that was really upset about his very long wall & how much it would cost to repair or replace it. Since it was on level ground & just a foot in on his property from sidewalk my dad drew him pilasters to put up every 8-10 ft. They are cement wider at bottom & have rebar in center & are up against side of wall that was leaning out toward street. Wall was only leaning not broken anywhere.At top the cement is narrowed. Looks like it was meant to be that way. I drove by it yesterday & it is still in great shape. About 200 ft. long. He mixed cement up himself after dad helped him brace it with 2x4's once pilasters were cured all braces removed & looks like it is all original. The cement was just smoothed& is narrower both ways at top so from side it is narrower than at bottom & looking straight on it is narrower as goes up. I think dad had him dig down about a foot to embed the rebar, can't remember is dad made him a form or not. Dad is 95 now & had stroke so wouldn't remember but the man saved a lot of money & since it is on a corner it was all his responsibility. No neighbor to deal with. Good luck. Oh, wood rots so cement would be better. If fence in good shape might be able to sink steel poles in next to it but wouldn't look professional like 1 my dad helped guy do.(At no charge I might add).

There is extensive experience with CBS construction--probably 96% of residential and 60% of low-rise commercial--here in the rainy sub-tropics of So-Fla. I'm suprised to find this block construction in NJ, done Florida-style, i.e. without insulation, and wonder how good the local builders are at executing it. But, I believe the OP that the issue IS wind-driven rain. The 'S' in CBS stands for Stucco, and that is the ONLY thing that makes an inherently leaky bare-block wall watertight. What jumps out at me is the OP mentions a "light" coating of stucco. There is nothing "light" about a proper stucco job. It is a THREE-coat process, and the end result is over 1/2" thick. Again, the stucco is the primary water blocking factor. Paint/sealers only enter the equation "down the road", after foundation settling has caused hairline cracks. Proper stucco IS the waterproof membrane. However, in a place like NJ with real winters, the other posters are correct that, rain aside, you probably need to clad the exterior with some kind of stiff insulation and, style permitting, fiber-cement planking. If you wish to keep the stucco look, there are EIFS systems that can be stuccoed-over. The EIFS systems typically include features that allow exterior condensation to drain away... make sure the stucco guy does NOT clog these.

If the wall is not holding back an earth load, it's not a retaining wall. It's a freestanding wall. You'll need a concrete footing, 8" depth (thickness,) whose base is below the frost line and whose width is double the combined width of all masonry that sits on it (block + stone.) You'll need rebar, embedded in the footing that continues to the top of the wall, every other block. The cells through which the rebar pass will be filled with concrete. Use truss or ladder mesh at every other course. While most of the illustrations and videos about building a cmu wall are for building structures, the principles are the same, so adapt for your needs.