You have so much potential! I'd deal with the entire space as a whole before spending money on furniture. Consult a landscape designer. There are a number of important questions.

How will you get from the patio to the yard? Where are/should the steps be?

What will be in the yard: swimming pool, fish pond, vegetable garden, play space, outdoor kitchen?

What about lighting, shade, drainage? You will save money long term if you come up with a plan. Plus, if you are planting trees, the sooner the better.

I agree, you have terrific potential. That is actually a generous patio space. IF the wall is a comfortable height, with some cushions it can make additional seating.

As @latifolia suggests, have a landscsping plan developed to provide privacy and shade. One will site plantings correct for your climate and soil and to provide seasonal color.

Think about how you wish to utilize the outside space(s). Will shade be necessary while landscaping matures? Insect protection? Size of group(s) for dining or socializing? Grilling, firepit, socializing, hot tub, etc.?

Take your time. Meanwhile obtain a few inexpensive patio chairs from which to imagine.

I could enjoy sitting out there on your nice clean level patio, eye level to interesting flowers and shrubs. One thing to consider if you haven't already, is adding the caps to your retaining wall.

Your retaining wall is too high to provide comfortable seating, but topping it with flat pavers will give you a finished look. You can plant something behind it that will grow to cover the top and drape nicely into the patio space. If you can't do anything other than plant grass on the lawn for now, do so. Rains and erosion will wash that dirt onto your patio and make it useless and a cleaning nightmare. Shop for furniture in person to find comfortable, cleanable pieces that you enjoy using. Nothing worse that a hard, metal chair with no cushioning that leaves wire mesh imprints on your rear end!

Creative Outdoor Stairs Options using Allan Block Retaining Walls · More Info

Yes, we’re not finished with the wall! planning on stairs that go into the yard, just waiting bc of expense (just finished lower level remodel). we are in San francisco, so no pool😏.