When a game creator adds wastelands to their game, Warzone will randomly distribute neutrals around before populating the rest of the map.
Typically, the game creator will specify a very large size for the wastelands. These effectively become "dead" territories that won't get taken down. This serves to change the gameplay around. For example, if a wasteland appears at a choke-point it could drastically change the way the game plays out in that region of the map.
It is each player's job to interpret how the wasteland will impact the game and to adjust their strategy accordingly.
Since bonuses with large wastelands are generally undesirable for capturing, sometimes the entire bonus is said to be a wasteland or to be wastelanded.
The game creator can control the number of wastelands that will be distributed as well as the size of the wastelands. In rare cases, Warzone will generate fewer wastelands than requested since it must ensure that there is enough room for all players to get at least one territory to start with.