PP offered some great tips! Your girls are going to love the room. I had a couple suggestions I haven't seen mentioned yet. For wall art: I love etsy.com for handmade art or budget-friendly photos. I have some great prints for my 2 girls' rooms. They also have vinyl adhesive quotes or you can order your girls' names. They can be pricey, so I ended just hand painting a two-tone pink cherry blossom tree. Not as fancy as this, but decent enough considering it only cost me a few quarts of paint. This decal from easy is $86. For your windows: I agree with the PP worried about window safety. With those windows, I would invest in plantation shutters (too heavy for a 2 or 3 year old to unlock and swing open) or buy a metal window gate to ensure your kids can't open the window. Then you can buy some pretty sheers to soften the look of plantation shutters. I got some from Pottery Barn Kids that are embroidered with pink and green butterflies to cover my daughter's shutters. It offers a light whimsical look. They're both sleeping now so I can't take photos. I can't copy the image here, but I see one on eBay now with lavender butterflies for $35 per 84" panel. Post photos when you finish the playroom!

First question - Which wall do you think would work best for the built-ins? The wall opposite the window or opposite the door? Toy storage -- whatever y'all decide to go with -- would work best (at least for me!) opposite the window. Largely because then the immediate dumping-toys-out-so-I-can-see-what-I-want-in-here mess is out of sight from the main entrance of the room/adjacent spaces. Second - how would you layout the space - ie where would art table go? There needs to be open space too as kids tend to stretch out on the floor to play. I would also, as others have mentioned, place the table under the window. It's nice to play under a window. :-) Our playroom table is also taller than a standard kiddie table, allowing the youngest children to sit/play/hide underneath it. 3- flooring? Carpet most comfy, but laminate easier to clean up. Would it look weird to do a combination of both? I like the idea of the hard flooring with carpet-like Flor tiles, since y'all combine playroom with art. (We do all of our art stuff at the dining table because of the mess, lol.) 4- fun ideas especially for the little kids nook? I was going to see if my builder can make the outside look like a little house... any other cool ideas you’ve done or seen? I’m purposely leaving our chalkboard wall because I don’t want to clean all the dust it leaves behind I'm going to be more fun and less practical than previous posters, lol -- I would definitely do something fun for the nook. A little house (with a Dutch door), painted in gender neutral colors with a magnetic-paint wall, would be awesome. Or, string up some hammocks in that space, with some silk foliage/leafy garland hung from the doorway (use several, so that it operates like a bead curtain), and glow-in-the-dark star stickers on the ceiling. Or maybe a little "restaurant" set up, with a small table, 2 chairs, and a room divider/half wall for the waiter/waitress to disappear behind and prepare the customers' orders. What are your kiddos interested in? Anything glow-in-the-dark or magnetic is a total win. :-)

Depending on how little your little ones are, you might want to stay away from curtains to avoid climbing/pulling hazards. I agree, move the hand print rug to create a separate, distinct play area in front of the window. I'd love to see a bench there with some throw pillows on it (to coordinate with what you put on the couch) and baskets underneath for blocks and Legos, etc. Or, a playtable and chairs would go nicely there also. Looks like you could also add a narrow bookshelf to the wall alongside the windows with a few puffs, to create a reading corner/nook. Don't get too carried away with finding the perfect pillows...it's a playroom. They will get stained and soiled. Get an assortment of primary colors from rug, (red, yellow, green, etc.) and make sure they are nice, light fluffy ones for some good pillow fights :)

Since the dining table + play area will likely be changing over time, I'd put the large piece of art over the sofa, where it has the best light. For the dining + play area, I'd suggest installing a picture rail at ceiling height, then hanging the pictures from it. That will let you move things around as your needs change, without filling your walls with holes. Maybe row of black and white photos, not too small, would look good across that wall. You can buy all sorts of systems and hooks. https://www.decoraid.com/blog/best-picture-rails