People pay lots of money to convert their multi room homes into open floorplans. This floorplan is very current. You've already made the separation with furniture and lighting as well as the ceiling height change.

It looks good to me.

I agree that you ceiling helps define the spaces. The idea of a larger rug is a good one to help too. If you have electrical outlets in the floor, I would add a more substantial sofa table than you have now with a couple lamps on it. That would also visually separate the kitchen from great room.
Honestly, the idea of open space is contradictory to what you are feeling. Your view of the fireplace wall is really nice. I would try to close in the room with half walls or beams.

I meant to say I would NOT try to close in the room with walls or beams.

It just goes to show that people always want to change! Your house is basically "houzz perfect"!! I would not add anything structural at all! Your decor is perfectly cohesive and everyone knows the difference between the kitchen and the living room so I think you are good!

A larger area rug would help define the spaces better- larger as in the perimeter lies a foot or two outside of the footprint of where the couches are. It will help ground the ceiling height change.

I wouldn't change anything "architecturally".

I'm not a big fan of open concept homes but I love yours. Please don't make any structural changes.

I agree with others about the rug. Since there's a difference in ceiling height between the two areas, you could paint one a subtle difference in color to differentiate the two areas.

The piece of furniture between the windows might do better as your sofa table. The trunk-like piece isn't working. I agree with the suggestion to remove the wood office chair and get a pair of armchairs. Continue your beach theme with more driftwood style pieces of casegoods. The rooms are well defined, just the decor that needs a tweak or two. Have you considered a wool sisal-look rug to continue the beach theme?

Thanks everyone for your input. Artiesmama, I am reupholstering 2 chairs for that area and hubby is making a large coffee table.

Love the idea of a bigger rug, that one came from our old house so it went with our old furniture.

I tried to photoshop (amaturely) some photos of what I meant by "architectural elements". The first photo is the way it is now, the second is supposed to resemble a painted boxed in beam with trim and the third is a wooden beam (which we would have done in a different color). I know the photos don't look that good but if you can use your imagination, what do you think?

OMG decoenthusiaste! We have a tree trunk just like that table and hubby is working on it to make it pretty and the right size for the glass top. Too funny. Thanks for the ideas ....

Your last pic with the driftwood looking beam would have been my suggestion, but I don't think it is necessary unless Mr. Woodworker, is game. How does it finish out on the kitchen side though?

Here it is from the kitchen! (Imagine a different color with more gray, yes driftwood looking).

I don't think you need it, but its your call. It looks a bit barrier like to me. See if a larger rug and some furniture tweaking won't do the trick first.

Why don't you consider some stone

Or this

Here is how we separated our spaces:

Beautiful Katharine! Thanks.

This room is the room of dreams.....

Get a larger rug to define the living "room" and another rug to define the dining "room". The living room furniture should have the front legs (or more) ON the rug. The dining room rug should be four feet wider and four feet longer than the table to allow easy use of the chairs (2' of rug, or a bit more, all around the table). Maybe the current living room rug is large enough for the dining room?