How can I restore this interior wooden siding?
It appears as if the finish is some type of penetrating stain and sealer. There may also be a worn topcoat, such as satin polyurethane, that has worn.

SAND - As described in several comments, wood siding can be sanded to both remove scratches and even out the color. If you wish to stain the surface to restore the natural finish and even out the tone, it is also necessary to remove any top coat. This requires sanding over the entire surface, obviously concentrating on scratches. A belt sander is hard to control vertically, can gouge and kicks up a lot of dust. An orbital sander, or a palm sander is easier if slower.

STAIN - Once the surface has been sanded , you can stain. You can try to find a penetrating stain that is close to the original and reapply that. If you have large sections of fairly bare wood (after scratch removal), you may want to start with a stain prep coat (like a stain primer) that gives you a more even tone. You can also use a darker stain if the wood looks very uneven or shabby despite sanding. I would avoid the combination stains and finish in one. They are faster and easier, but when they scratch, the underlying lighter wood shows through more than with a conventional penetrating stain. 

TOP COAT - Once the stain is done and dry, you should use a top coat such as polyurethane. You probably do not want a gloss finish. Satin finishes are usually used on this type of paneling and are more forgiving of scratches and brush strokes.  There are even some wiping finishes that tend to give a hand rubbed look. If you want it very flat, there are a few matte finish polys.

PAINTING - As an alternative, you could consider painting the surface. After sanding the scratches and lightly sanding the rest of the surface (but needs less sanding than if you stain), you could use conventional trim paint, with a variety of surface glosses. 

GLAZING - You also could apply a glaze coat which is somewhere between paint, stain and top coat. You paint it on and then wipe some of it off with rags or sponges. It coats the wood with a distinct color, but lets some of the wood grain and underlying color show through. You could go darker or lighter than the current color for a two toned effect. This is a somewhat dramatic finish, so test it somewhere inconspicuous before committing to the whole project. If you do not like it, you can sand it off when dry and use a different approach.