I think pictures of all the entry points and maybe a diagram of the space would help people to help you, can you add those?

Updated with diagram

Erica do you have measurements? it looks like a big space...that closet serves that space?

also, is that a mirror above the laundry baskets? It looks like pass thru to the kitchen, but on your diagram it's labeled as a bedroom.

What is your budget? If you have the $$, I'd take the section labeled "closet", enlarge it (even with the stairwell on the left and the hall on the right) and make that your laundry room / storage area - then, I'd make your current laundry room a closet.

Looks like this is an ideal space for you to fold and sort laundry, but how much better would it be if you could obscure the baskets and have a surface to fold? I would have a long cabinet built -- with a space underneath to slide in your cart, as well as spaces for your tall baskets. You could add doors if you want to hide all that. On top, a counter to fold.

ha, i also thought it was a pass through to the kitchen. you need some art there, and not a mirror reflecting nothing needing reflecting.

ok I think I get it...how about this where the laundry is now

https://www.homedepot.com/p/Home-Decorators-Collection-Hampton-Harbor-37-in-Triple-Tilt-Out-Hamper-in-Dove-Grey-2601330270/300125251

then you can some pretty things on top of it, with a catch all bowl for stuff you pull out of everybody's pockets before washing their clothes

and that would allow to keep the mirror or replace it with pretty artwork

something like one of these maybe

https://www.google.com/search?biw=911&bih=445&tbm=isch&sa=1&ei=gjyQWsr7OcHetQWphKiYCg&q=shelving+units+with+doors+and+drawers&oq=+shelving+units+with+doors&gs_l=psy-ab.1.1.0j0i24k1.10526.16253.0.19051.12.7.0.4.4.0.123.812.0j7.7.0....0...1c.1.64.psy-ab..1.11.863...0i67k1j0i30k1j0i8i30k1.0.rx3zJBL0g

If you are just wanting to decorate it, I agree with the suggestion regarding a cabinet with a folding surface, under which you can store your laundry and remodeling your closet so it has shoe racks above and enough room for your vacuum. If you want to renovate, you might consider making it a laundry room. If you eliminate the closet, you could put your washer and dryer along the wall, where the shoe rack is and add a countertop over them with high, deep cabinets/shelves above. Without dimensions, I’m not sure if this would work but it’s a thought. If there isn’t enough room to put up a wall, you could just enclose everything behind doors. Here’s a set up I saw when I was remodeling. You could do parts of this maybe add an area for laundry baskets, instead of the sink/tall cabinet.

It could be enclosed to become a really great dressing room to serve the master bedroom.

But with 5 little boys, how about a play room? Put a table in there for coloring and future homework, their trains and favorite toys. Some cute storage and a chalk board. And maybe a TV. Keep the toys out of the living room.

Thank you for your input everyone! I was initially hesitant about putting larger storage cabinets and such because I didnt want to close the room in more. It's becoming clear to me now that I basically need to embrace this space as a giant walk through closet.

Storage is a wonderful thing!

We remodeled the downstairs last summer and the kids already have ample space for play. Crafts and homework are done in the dining room. Reading is everywhere. Thus the uselessness of the space haha

But it can be a beautiful wall through closet! I would put doors on both sides so that you walk through, but the kids don't.

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I agree with hatetoshop, it looks like you have a great opportunity to have a process are for laundry. You could provide more upper and lower storage, hanging, ironing; perfect! If you don't have more storage elsewhere this is the place. Go for it. If you like you can close the wall by that bedroom door so it's not walk-through but a wall of upper and lower storang mixed with tall storage. Also having a place for hanging laundry awaiting ironing(?).

I would look at flipping the closet; closing the wall to this area and putting a door in on the bathroom side. That would give you two moderately long walls that aren't in a traffic zone. That would give you a lot more flexibility to put stuff in the space, regardless of what you decided to do with it.

I like Cawaps' suggestion to have the closet open up in the hall toward the bathroom and to be able to reclaim use of those two walls.

With 5 kids under seven YO, I would be looking at getting the W/D out of what looks like a very small, congested space going into the Master BR. That looks like a nightmare to use with all the swinging doors and tight space. So I would be looking at turning that space into an open concept laundry room with the W/D backing up to the staircase wall. Since you have a basement, the plumbing part will be easier. Bad news is that you have already remodeled the basement...the old one step forward, two steps back routine to be moving plbg. now.

Dryer venting always gets more complicated when the dryer backs up to an interior wall. But it appears that you have that situation with your current set up...so maybe you have a ventless dryer, can tap into existing vent or go up thru the attic & out the roof if you don't have a second floor above.

Anyway, thought I would suggest it. I know you have a ton of small clothes to launder now. In the flash of an eye, you're going to be dealing with three tons of big clothes...

No need to make it "something." It's just a big hallway. Ok to have it be just that.