Sorry but no way to have that be anything but storage on slide out shelves for access . 4' just not even able to sit on the floor and not bump your head . Some kind of slide out system for stuff used rarely is all I can think of maybe low shelving on wheels but the 10' is really deep Maybe some one on here has a good idea.

You show the entire basement and where this space is within. You tell what you want/ need in the basement, when it is finished.

It's not a space you can stand in, it's useless for anything other than a little kid hidey hole "secret space" for play. Do you have little kids?

We can't read minds, nor see your vision for the entire space.Draw it, with every wall, window, EGRESS !! for emergency exit. Scale on graph paper and load as a jpeg we can read...

bold and legible.

if you have room in the main space, you could add a pull out Bed with storage underneath.

Is your mudroom in the basement, what is the basement before you reach that drop? You sound like you have a sunken mudroom

Height

What an interesting space to work with! The varying ceiling heights could actually become a unique design feature. For the 10x10 area with 4-foot ceilings, here are a few creative ideas:

Cozy Home Theater Niche – Lower ceilings can enhance the immersive feel of a movie zone. Add tiered floor cushions, a projector, and mood lighting to lean into the "hidden den" vibe.

Wine Cellar or Tasting Corner – Perfect for low-clearance storage. Install climate-controlled racks for wine/collectibles and pair it with a small seated area just outside the taller section.

Kids’ Secret Play Zone – Build a whimsical, low-height hideout with crawl spaces, built-in toy storage, and chalkboard walls. The limited height won’t bother little ones!

Meditation/Yoga Retreat – Keep the area minimalist with tatami mats, soft lighting, and shelving for plants or calming decor. The enclosed feel could enhance tranquility.

Functional Utility Hub – Create a hidden "mechanical room" with custom cabinetry to house utilities (water heater, HVAC) while disguising it behind a sleek, space-saving design.

Embrace the quirkiness – maybe even add a small arched or sliding door to highlight the transition between heights! Would love to hear what others suggest.😊