Translation:The Australian children sit on the ground by that wall.
Padló is a built floor specifically, but föld covers it as well. Föld is basically "what you're walking on" - floor, ground, earth, or Earth.
Is there some reason, "The Australian children are sitting on the ground at that wall." is wrong? When I took Hungarian classes, teachers tended to favor translating "nal" "nel" as "at" and not by, which in english too closely operates like the post position "mellett".
You're right. We could say "at the wall" or "against the wall" for translating "a falnál".