You could trim out the window just outside of the recess with thick (3-4”) white trim - paint the recess also white to match - this will brighten the space as well as solve your tile dilemma , the tile will now butt up against the trim.

Not sure how high you plan to run tile backsplash at the window but I would run it all the way up to ceiling there. Also agree with comment above about trimming out window well.

Thank you both! The wall above the window is just 2” before it hits the rounded edge. since our other windows in the house do not have trim, wouldn’t that be a little off? And then how would you handle the right side of the sink? we have an elevated bar top that wraps around a bit

Now I see the rounded edge at the right side of your sink. I actually have the same tile in my bathroom above the tub. As you can see a smooth edge tile goes up the shower wall (lowes). You could use that edge tile at the end of the your wall where it begins to round to the breakfast bar. You could also put the same edge tile around the window, if you decide that casing would look off from the rest of the house. I think either would look great! Regardless I would paint the recess wall portion of the window white.

So as a thought for the window trim what I was suggesting is that you place wood on the inside of the recess area and then place a very small border/frame that is not too fancy...perhaps it is a simple 2-3” wide flat board...think shaker style. I wonder if you tiled into the recess it would look more like something that you in a bathroom window.

See how this one is a simple board in the recess as well as outside on the wall...

As an alternative see how this one only has wood in the recessed area?

I like both!! The first is probably easiest to tile around. For the 2nd pic I would suggest you use the edge trim tile around the window , I don’t think the cut subway tile with nothing to butt up to looks very good, a bit unfinished. I would definitely get some wood trim for the recessed part of the window and see if it’ll fit and work. Chances are good that it will, otherwise IMO paint would look nice and be fine. The rounded edges are interesting.

In fact, if it were my house (and it’s not) I would add a simple 4” backsplash above the countertop, and leave the window alone. I think the window are rounded edges are cool and should be let alone :)