I would guess that the "walden" portion means "wooded valley" rather than "walled-in," for the same reason that Walden Pond got its name. Also, most towns that arose in the Medieval Ages that had anything of value, had walls around them, so a town without walls around it would be unusual, and thus justify including that fact in the name.We went to a cute little village, Saffron Walden. kind of touristy with lots of old buildings.
The name we were told was derived from their agricultural product of the time, saffron (a money crop spice) and the fact that it was had a wall around the place (walled in --> walden) to protect it against plunderers.
According to this source, https://www.houseofnames.com/walden-family-crest,
They also mention Saffron Walden in the same article.The surname Walden comes from the Old English words wealh and denu, which mean foreigner and valley. Thus, the surname would have been given to a person who was a stranger from a valley. Another source claims a slightly different origin of the place name: "The name Walden is said to be derived from the Saxon words Weald and Den, signifying a woody valley. At a latter period the place was called Waldenburgh.