desk/work space? lounge chair and book shelf?

If you do not use it show use some pics of the whole kitchen and maybe we can help.

There aren't dimensions for the nook (including the height btw floor & window), but if there's (12-)15" of space on either side of the window then you could turn it into a pantry: tall cabinets on one side and lower cabinet + upper cabinet on the other side (nice to have a bit of counter to put things onto).. below is the 15" pantry/cabinets from Ikea, but other places could do more custom depth (it wouldn't be ~roomy~ in there, but it'd be a nicely lit pantry).

A more dramatic change, would be something like, removing the closet in the bottom right side of the floor plan and incorporating that space into the kitchen. Again, not all the pertinent dimensions are available, so it's a bit of a guess =)

- Move the stove to the lower wall and have it + the counters pulled out from the wall == extra deep counters (remove the bay window and instead flank the stove with two windows)

- Move the fridge to the other side of the sink (closer to the dining room)

- Microwave can go in the island (along with a trash cabinet)

- This lets you shift the island 'down' towards the stove to free up the slight pinch point btw the island and the upper closet

- Could make space for a tall pantry on the right side of the fridge

I'd consider closing off the window and pulling the wall forward to accommodate the refrigerator and a pantry cabinet with roll out shelves. It would give you extra storage and make the refrigerator part of the kitchen instead of floating on its own on the other side.

If that's not an option because of budget or because you don't want to lose the window, I would consider building a window seat across the back under the window (the baseboards can be integrated into the base of the window seat) and adding a small cafe table for a place to sit and read or have a cup of coffee.

I would go with damiarain his/her layout

If you don't use this space as it is, that means you don't need another table with chairs in the place of these. Turn the nook into a workspace or pantry. Just think what do you need more.

a rug for a children's play nook?