I'd prob paint that back wall a darker color, or do some type of wall trim treatment. hang a large picture, or do some tall vases of some sort. up to you what you like you could always look into closing up the gap and extending your loft to include a little sitting area

Yeah, you're sort of screwed by the doorway to the dining room -- there's no real way to set up the door side of the room as more than a sliver by the windows. You're on the right track in treating it as two separate zones, though. Here are a couple ideas that might help you visualize the right solution for your family. 1) Treat the area near the door as a Kid Containment Zone. Put a bench where the entry table is, with baskets underneath for shoes, and maybe a couple of hooks for (future?) book bags and so forth. Then put a small table right next to the door, in front of the sidelight, as your entry table, with a bowl for keys or mail or whatever (and a drawer for mittens). Reading chair and lamp in corner by dining room, to look inviting for a pause, might never get used, or could have a small bookcase for kids when they need a moment to themselves. 2) Make that zone a gaming area, with a smaller table against the windows and 2-3 chairs. Floor lamp in corner for evening activities. A puzzle could live there, or it could be the go-to space for games. Or you could instead do a lower crafts table and a storage cabinet. (You might have those kinds of spaces elsewhere in the house.) 3) No matter what you do with that zone, I'd enlarge the living area in both dimensions. Couch against the wall with chairs on kitchen side, table and lamp between chairs, large coffee table (think a big circle!) that can double as together-activities zone. Use a big area rug to anchor and define this area, and let it come down very close to the hallway to the bedrooms. This will help you scale your furniture and help eat into the dead zone. If you entertain, you might add another arm chair on the doorway side of the ensemble, or use an L-shaped couch, to encompass more seating and enclose more space. HOpe this helps!

I can't tell you all how much I appreciate your feedback, to the point where I have tears in my eyes. I asked some of my family members what they think, and they looked at me and shrugged LOL. Thank you for pointing out that if I put something on either side of the window, the right side would be empty, you are right that would look strange. I really agree that a cabinet would make the kitchen look more enclosed, especially since it is a small kitchen. I really like the idea of the floating corner shelves, and I never thought about doing that. I also think it will be very unique! I am going to look at some examples now. Thank you again for all your help!

Yes, a TV console. You can get them with no interior spaces, but someday you might want to record programs or whatever? At minimum, get something that reaches both windows, and ideally it might be a bit longer. TV should almost certainly come down for better eye level match.