Yes Walmart does really recycle plastic bags.
Well what they do with the plastic bags is Walmart collects those plastic bags for recycling and then ships them off to a recycling center.
The bags are baled up and then melted down at a recycling plant and then turned into new plastic bags or even other plastic.
The plastic bags that are recycled are also sometimes made into disposable diapers, plastic packaging, plastic jugs etc.
It takes a lot of plastic bags to make new plastic bags or anything else plastic with the recycled plastic bags.
But the plastic bags do get sent off for recycling.