How do I cover old lath and plaster walls?
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Paint it! I have an old house with lath and plaster. Nothing wrong with it. Or if walls are reasonably smooth, wallpaper.
Please gut it. I did that to two of my 1910 houses.
You’ll find old failed electrical wires insulation that needs to be replaced. The exterior walls will need insulation & old plumbing pipes & heating ducts can be inspected & insulated as well.
Just veneering it with 1/4” Sheetrock is possible, but trim & switch plate/outlet plate covers won’t fit anymore.
Sheetrock over them.
A lot of your finish work will depend on the age of the house. My experience is with a house built just after the Civil War. Have 1/4 inch drywall installed over it. Remove the top (ogee) part of the baseboard, if you have it, before the wallboard is installed. Then replace the molding with newer ogee. Todays trim is not as deep as that of olden days and will not look skimpy when going over the additional 1/4 inch. You most likely can caulk where the drywall meets the door and window trim. If you want to do a stellar job, pull the moldings off and reinstall after walls are resurfaced. BUT removing all the wood trim is not for the faint of heart or skill especially if you want to reuse it. You can bump out your sockets and switches with spacers if you do electrical work, otherwise hire it out.
There is also the option of having the plaster repaired or replaced professionally.
Cheryl Williamsen makes a valid point about old wire, insulation, and plumbing issues. If you are facing these challenges then you should consider taking the walls down to the studs.