You have done a beautiful job of tucking plants into the crevices of your retaining walls. Your house trim color is perfect -- just slightly lighter in hue than the retaining wall blocks. First I would paint the big, flat gray wall slightly lighter than the blocks and slightly darker than the house trim. The concrete walk and stairs I would stain a mottled blend of the blocks and the house trim colors. Next would be to paint the railing black or the house body color. Now, think of the following as creating a light, airy trellise structure from the walk-level face of the (currently gray) wall to about 7' above the top of the wall (using 6x6" posts attached to the wall) with a corresponding line of posts sunk into the terrace level 2' in from the outside edge of the wall-attached posts. The inside posts would be about 6-8" higher than the outside posts. Put 4x4" wood to attach the outside line of posts to each other and do the same with the inside line of posts. Run wood pieces at the top of the two lines of posts from the inside line to the outside line at about a 45 degree angle. They would be cantilevered up at the terrace level. Across the top of the angled pieces create your top trellise boards which run parallel to the two lines of posts. OK. There you have your basic structure. You might want to extend the structure around to follow the street side of the terrace. You could then follow the suggestion of reom10 above about creating a bench-planter on the terrace side. Your spacing of the boards parallel to the gray wall and attached to the outside posts would determine how private you wanted your terrace to be. You might want to soften the terrace "floor" by using something irregular like flagstone with groundcover plantings between the stones. From the latticework on top of your structure you could hang seasonal flower baskets. Plant vines to go up the trellis and spill down the wall. How about planting a row of tall, narrow shrubs along the neighbor's fence above your terrace to help add to your privacy and make your yard feel less 'structured'? Or, how about patio table/s with umbrellas to block your neighbor's view? Anyway, you have a fun project ahead of you.

Thanks Orangecamera. It's still a work in progress and mud everywhere Sorry we did look at having the steps' off set' but it didn't seem to go with only three steps and a small area. And about the zen well the cats are doing that for us much to our disappointment (it's still like a litter box to them). We went to the garden supply place still not knowing what kind of stones we were getting. We stood in front of all the bins (there where many). We even looked at mixing some. The grey stones had a bin more the size we wanted but we ended up getting the golden fleck. It was a little smaller, which was a shame, the bigger ones were so mixed in their grading it looked too messy. So this is what we finished up with. It was seagardens that got me thinking away from grey and nwduck mentioning the drainage. So this has really helped. Also everyone seem to think the wooden steps needed to go a lot lower. Next it's figuring out where the large river stones should go

This made me laugh: http://www.theguardian.com/environment/2016/jun/09/seagull-turns-orange-after-falling-into-vat-of-chicken-tikka-masala I couldn't copy the picture, but it's hilarious.

windows in master bedroom need to allow views and privacy and much as i would prefer bed on NE this keeps the bed in view towards and from family room so prefer bed on south wests wall and small sliding doors pushed towards north side of room with tall narrow window beside sliding door and highlight window for light with privacy and wall space for chest of drawers...acknowledging theta the pwdr doesn't have a window but my suggested arrangement uses less total space more efficiently and is better for older kids and long stay visiting parents (more people can use the various options at the same time) and a small ventilating skylight will exhaust and brighten the toilet and vanity area ...the wide door into the lounge can be a stacker or stable door so you need to investigate local options (and everything is expensive unless it does what you want...we always use solid core doors that can be ten times the price of a basic hollow core door but love them so we economise elsewhere) and barn door between entry and family would be OK as long as you like them and it doesn't compromise lounge doors but could look ok if both doors are the same style and different widths...and location of dishwasher is personal and if you have already been unhappy with sink in main kitchen then have it in the scullery...main advantage of my suggested kitchen location is that it's closer to the front and the family area and external doors and the pantry uses the central space that can be much better illuminated with another ventilating skylight instead of a tiny external window and noisy exhaust fan