You could make it into a nice sitting room . Cause if you have party's they could come to kitchen then flow to the sitting room. By the way nice rug

I just don't know how to fit furniture in here even for a sitting room

I think we need to see a photo of the glass doors with the drapes open. Can't determine where to place furniture until the traffic pattern is visible.

It's hard to tell from the picture, but it looks like it is part of the kitchen. How about a kitchen table.

Judging by all the toys, I'm going to assume you are currently using this as a play space. So I would advise embracing that vibe:

A couple of low swivel chairs flanking the fireplace, facing into the kitchen.

Push the rug over so it is 18" from the wall. Add a short sofa, loveseat, or settee. Use the kids' table as a coffee table. Use a cube organizer shelf on the left side of the sofa to hold books, small ankle breakers, lego and a lamp.

Put the train table in the center of the room, or relocate it to a different space.

The fireplace is really pretty, now all it needs is some cozy seating for enjoying it :)

I would start with a sofa facing the fireplace with a sofa table behind it if there’s room. Add a grouping of chairs, all different but small, on the rug.

Thank you all so so much for much needed help. The space is only 13 feet wide so if been hesitant because I'm is unsure how the heck furniture will fit. Here are some more photos

Turn the rug and do 4 small scale swivel chairs with coffee table in center and you can leave the children's area

I'd treat it as two separate rooms -- a couple of small chairs or ottomans near the fireplace for cold evenings, and then the rest of the room is a family room. Do you have a TV room elsewhere? You could put one on the far wall here, or just do as suggested above and make a comfortable grouping of chairs around a table (or a loveseat + two chairs could work). Maybe the kids get the middle zone for their playspace for the time being, or you slide the seating a bit toward the kitchen and put some toy bins on the far wall to catch the clutter when company comes.

I really love the idea of two chairs in front of the fireplace with play area on the other side of room but I'm fearful the space is too tight. See attached photos... obviously these are NOT the type of chairs we would use but you can see there is only about 4' of space between the bar stool in the kitchen and the proposed other chair in front of fireplace. Do you think thats too tight?

I'm thinking the four swivel chairs with coffee table might be best option? We don't currently have tv in here because I could not figure out how a couch would fit. We do have dinning table in the other area off long skinny kitchen

If you turn the chairs so their backs are to the fire most of the time, you can push them right up to the hearth.

One would go almost in the corner formed between the stone and the wall, the other would go over by the window. That will leave you a clear walkway most of the time, and you can swivel to enjoy the fire and pivot back if someone needs to pass.

Totally off topic, but are the drapes custom? I want to get rid of my vertical blinds and replace with curtains..

The curtains are custom made and installed and they were worth every single penny.

Thoughts on if something like this photo of furniture layout (minus end table near chair since my fireplace is larger with semi Circle brick) would work in my space with the two chairs next to the fireplace?

Exactly what I was attempting to describe! I think it would be so cozy :)