This is a very common 70s/80s look, i.e. drywall for stair and balcony railings. It's basically a cheap way to achieve the code requirement. This is not a DIY project; should be done by a stair rail contractor once you've picked a style you like. Do some photo searches on this site for ideas and bring them with you.

It just looks scruffy and weird because of the patches and mismatched paint and all. It will look pretty good with the rest of the chunky woodwork once you get it all fixed up.

Replacing the solid sheetrock with railings/balustrades will really open up the space and look more inviting! It's an involved not-DIY job but will definitely be worth it.