Here are a few ideas for two story walls

It would be helpful to see the sitting area itself, not just the atrium, so we can judge where sound dampening could be added, see the style of the space, etc.

Maybe a couple of large tapestries hung on the left and right to absorb some sound and add interest?

Tapestries will dampen sound, but so will stretched canvases--anything that isn't a hard surface.

Your light fixture seems awkwardly placed with respect to the new sitting area. It is hanging too low to be a focus point, but high enough that you can't ignore it. I assume it is centered over the open space below, but that makes it off center when viewed from the landing. I don't know if there is a different fixture/different height/different placement that will look good from both the landing and from below, but it's something to consider. I would consider either leave it centered over the room below and lower it so it isn't so obtrusive from the landing, or hang it higher and move it so it is more centered as viewed from the landing (I'd also look for a different fixture, wider than it is tall, in that case).

Amazing comments - thank you all so much! And the pictures are wonderful, I had not found them in my searches. I'm inclined to ditch the shades, and possibly add some canvas panels set in decorative moulding. I originally considered tapestries, but really couldn't find anything I liked. I can get a coordinating rug. i knew I didn't care for the lamp but wasn't sure what was wrong. Great observations and advice on that! Thank you all again!

You could possibly find lighting that can be centered in the area?