Walsh originally constructed his diagrams by plotting what he described as "orbital binding energies" versus bond angles.  What Walsh was actually describing by this term is unclear; some believe he was in fact referring to ionization potentials, however this remains a topic of debate.   At any rate, the general concept he put forth was that the total energy of a molecule is equal to the sum of all of the "orbital binding energies" in that molecule.  Hence, from knowledge of the stabilization or destabilization of each of the orbitals by an alteration of the molecular bond angle, the equilibrium bond angle for a particular state of the molecule can be predicted.  Orbitals which interact to stabilize one configuration (ex. Linear) may or may not overlap in another configuration (ex. Bent), thus one geometry will be calculably more stable than the other.
Typically, core orbitals (1s for B, C, N, O, F, and Ne) are excluded from Walsh diagrams because they are so low in energy that they do not experience a significant change by variations in bond angle.  Only valence orbitals are considered.  However, one should keep in mind that some of the valence orbitals are often unoccupied.