Neighbor is building a retaining wall on my property. What should I do?

No, but you can have it towed by a towing service and the neighbor has to cover the costs. However, I would consider whether that is necessary, for example, because otherwise you have no place to park.

But with properties it applies: whatever is on it (house, garage, wall) belongs to the owner of the property and they can do whatever they want with it. I would rather see that as a means of pressure to finally get a reaction from the neighbor.

Not what is written on it - like the car - but what is firmly attached to it - like the house or the wall - belongs to the landowner.

I only asked because in BaWü in individual cases even pure formal illegality is sufficient for an order from the building authority. This is not the case in other federal states.

The principle of legality may seem like a sharp tooth at first glance, but it already wobbles with the denial of a public interest.

The neighbor will not respond to a self-written letter/email

So far, in this thread I have only found as an apparently prevailing interpretation—but no conclusive evidence—that the neighbor is fashioned after the pattern of the antisocial dimwit. According to the descriptions, I rather see him as a layperson who believes in the site manager, overwhelmed by what the OP criticizes to assess it or even to derive an appropriate reaction. He simply seems naively surprised by a curved property boundary and thinks that a professional bricklayer should actually know how and where to do it correctly. Intellectually possibly very close to the Alphakevin, but that does not have to be maliciously motivated. I would welcome if the warmongering comments cooled down. Zero tolerance requires a thorough examination of the situation, and I regularly consider a final coup de grâce inappropriate in cases of building law violations.
That the neighbor delegates to (dilatory) experts when he is pinged with a hint that exceeds his horizon on a chat channel, I do not initially see as aggression against the Hague Rules of Land Warfare.

But it already fails just with the denial of a public interest.

That is not correct. The public interest lies in lawful conditions. Any purely formal illegality justifies an order from the lower building authority. The only point of contention in jurisprudence is whether a purely formal illegality justifies immediate enforcement and/or a prohibition of use. But the smart gentlemen in Mannheim at the VGH are supposed to decide that.

So far I have only found in this thread an apparently prevailing interpretation – but no valid evidence – that the neighbor is patterned after the antisocial idiot.

That’s true, it is a pure accusation.

Every purely formal illegality justifies an order from the lower building authority.

Exactly, "justifies," not "forces."

That's true, it's a pure allegation.

Majority opinion does not replace the search for truth. Electric chair only upon conviction by all jurors.
I would consider it appropriate to send the neighbor a clarification, roughly with the content: "You are using my property without lease payment to erect a building. I hereby revoke my tolerance of it with immediate effect and set a deadline until xx for its removal. I do not intend to offer you an option to acquire the portion of the property taken over. After the deadline expires, I feel compelled to initiate substitute performance." Note well, this is and does not replace legal advice; this is my personal opinion!

I hereby revoke my tolerance of the same with immediate effect

That sounds like a confirmation that such tolerance existed in the past. Dangerous. Such wording is used by a lawyer, not someone from the forum.