Damaged Bathroom Wall
This kind of wall damage is common in mobile homes. The most likely cause is some sort of leak around the bathroom shower faucets. It is possible it is the result of careless showers where water frequently splashed out and got the floor wet. However, before you repair it you will want to make sure there are no leaks.
If you are planning to paint the walls you can repair this with several layers of drywall mud. That will bring it level with the rest of the wall. Multiple layers will reduce problems resulting from shrinkage and cracking of the mud.
If you are hoping to not have to paint you might be able to fill the hole with drywall mud and cover it with a wide baseboard trim strip.
