Half wall with paned window wall above. Allows light to permeate and physically separate a room without visually separating rooms. Good alternative for where a solid wall could obstruct an attractive view.
This is a nice-looking living room with smaller rug. Perhaps the key is to frame the rug with sofas / sofa and armchair combo / sofa and the window. And another trick is to fill up the room so the size doesn't look awkward.