Okay, I see now. Apparently you have to choose one of the "Dynamic" wallpaper designs for it to work. I'm using my own wallpaper image so it doesn't move around. I tried one of iOS 7's dynamic wallpapers and I can see how that would drive people nuts, cause migraines, and possibly even set off seizures for some. It reminds me of the lava lamps from the 1960s, but in super slow motion. Yuk!!

EDIT: Changing the setting for Reduce Motion has no discernible affect on the so-called parallax view. I say so-called because it is nothing more than an animated background. Moving the device around has no affect that I can see, and that would be a requirement for it to be a true parallax view.