More photos of the space, please. The bay window area looks as if it is meant to be a dining area. With what your photo shows now is a sectional too big for the space.

Ideally I want to turn the back area for a designated kids space.

Could you move the sectional up toward the fireplace just enough so it clears the bay window.

By doing that, does the pink rug fit in the bay area?

Consider putting cabinets under the windows. They would hold a lot of toys, games, trucks, dolls.

It’ll be too close to the TV then.

I would get console table for the wall and wall art above.

As for kids place, you can get round kids table with chairs for playing, drawings, etc.

https://www.ikea.com/us/en/p/mammut-childrens-table-indoor-outdoor-blue-90365180/

I have a console at my entry way. If that wasn’t there, I’d totally put one where you suggested!

Entry way