The wallpaper recipe follows a pattern of two papers on top of each other with two dyes to the side. The recipe yields 12 wallpapers, creating a design that is 3 blocks wide and 4 blocks tall.
In order to remove wallpaper you must use a wallpaper scraper. It is crafted from stick with an iron ingot above it with paper on top of the ingot.
Right click a vertical face of an opaque full block to place the wallpaper. The wallpaper will be placed as a continuation of surrounding wallpaper. If there is no wallpaper directly adjacent then it will be the bottom left part of the design if there is a floor in front of the wall, otherwise it will be the top left.
For the 1.8 version the supported OptiFine versions are OptiFine 1.8.0 HD U D2, D3, and D5, using a version not listed here may cause problems.