The smaller decorative windows shouldn't be covered at all. They're beautiful. For the center windows and the larger window on the side wall, I'd mount a decorative rod on the wall above them close to ceiling height with drapery panels on each side (on rings maybe?) that can be closed for privacy or left open for light and to show the nice wood trim.

I agree, roman shade would be first choice but a couple others for your consideration: 1) you could make a perfect size cheap cafe curtain to cover 1/2 -2/3 of the window with some iron on hemming tape either rod pocket orclip on curtain rings, that way you let the top half of the light in 2) window obscuring sheets are very easy to apply and found on amazon. I have the former in my downstairs powder and latter in my upstairs bath and I've never had a peeling or moisture problem 3 years later

Unless you plan (or don't mind) covering much of the side windows, curtains won't work. There's just not enough wall space. Shades or blinds would be a better choice. Romans, wood blinds or woven woods would work.

The whole hang it to the ceiling thing really depends on the room. Back in the day we used valances. Hanging a valance up to the ceiling hit the rod and gave one the illusion the windows go to the ceiling. You didn't see the gap between the casing and the ceiling. W/o the valance there is no kidding anyone. If your ceilings are sooo tall it tempts you to hang art above the window casing and below the rod then you have hung the curtains too high!! Because you have less space not more between the door and the ceiling I think it would look fine to hang the rod high. It's about how weird the gap between the casing and rod look!!!! Most sliding doors work best when you stack the open curtain all to the side of the immoveable pane. With your little wall space this will cover most of that glass. Do you need more light than that during the day? That's a much bigger issue to consider than how high to hand your rod.