REMOVE THE CARPET.

Almost looks like that area was all part of the stairway at one time, and something has been remodeled and changed. I would want those steps to the weird area removed and everything be level with the main floor, however, you need to check from underneath, if that can even be done. There may be a reason it was left that way. That short dividing railing, should go all the way to floor. It appears it could be dangerous, with no railing on the bottom steps.

For safety, and building code, reasons, the handrail must come all of the way down.