Whether an area ends up "looking nice" depends on all the factors that make it up ... not just whether it has a retaining wall, or not. The link you provided does not work for me so can't see the retaining wall anyway.

Since it's a small confined area, it would be rather easy to make it into what I think you are describing. You'd need to excavate the gravel-paved area in order to make room for a layer of gravel. You'd need fine gravel with fines so it packs hard and is useful for paving .... not loose, marbley pea gravel. Since you already have ideas on locating a tree, you should create a simple plan and show the tree on the plan so we could know where you mean. I don't understand it from your description.

I think your inspiration photo could be applied quite nicely to your area. It would take some modification to get it to fit and compliment the existing hardscaping but it can certainly be done. I'd suggest you find a good local garden designer, show him/her your inspiration and let them see what they can do. Unless you've done this before, it is likely more of a DIY project than you may be comfortable with - takes some skill and effort to lay hardscaping securely and with the degree of detail your photo shows.

A few ways to approach your yard:

A different approach:

I love your idea of the outdoor space, and I also love Dig Doug's second comment of opening up the walkway with benches. Dependent on the space I think both could work. I would love to see on the planter side a fountain, this can add a calming sound and make the garden feel more secluded. I also love the idea of planting jasmine to grow along the walls.

Pleached trees like those in your inspiration picture require an extreme amount of care and skill to maintain. I'm sure the London homeowner has a gardener on staff caring for that garden. Something like Dig Doug's Designs rendering would be much more manageable.

Hello all, thank you so much for all your comments. Sorry for only getting back now, it has been a pretty crazy week. I really like Doug's ideas but definitely, want a space around a garden set. This would be the ideal place to have tea or even breakfast with the family. I live in a very rural area and have no local garden designer around to do anything for me. Its all on me - So I definitely need something that can be a bit of a DIY.

Take measurements of your space and draw it out on graph paper. That way you can try different things. If you already own the table and chairs put them out there to figure out what works,