We live in a small 1300 sq. ft. house(I think that's how big it is). We have a very small living room, a very small dining room, a small family room, a teeny kitchen that opens to the family room, a little mudroom, 1 cramped little office room piled with stuff, 3 teeny bedrooms (2 have sloped roofs and are very narrow attic rooms), and 1 teenytiny bathroom. And 3 kids and 1 big husky! LOL! We use the dining room for any lessons that need a table, and the big comfy squishy chairs in the living room for reading. Our kitchen does not have room for a table or island for eating. We used to have a kitchen table in the mudroom. It was a really tight fit (and who wats to eat with the coats and shoes?) and I wanted a place for my sewing machine so it isn't there anymore. Since we do lessons in the dining room I have to make sure it's all cleared away for meals (or at least pushed to one side, lol). Our dining room really is too small, though. We have a big table with 6 chairs, a corner cupboard, sideboard, endtable, small kiddie table with chairs in the corner and it's where we put all the big toys (toy kitchen, dress ups, toy vacuum, toy stroller, etc). I keep the books we are currently using arranged as neatly as possible on the side board. We keep a big plastic tub with all the arts and crafts stuff under the dining room table. I do have some school things and artwork taped to the walls of the dining room, but we tend to tape that kinda stuff all over the house, wherever the kids want it displayed. All the rest of the books we use for school are on a big bookshelf in the living room. We have 2 big shelves in the living room, I use one for our homeschool books, past and future, but it is quickly filling up and we're not sure what to do when it's full yet.
We also have a small attic and unfinished basement so we may start storing things we don't need right away in labeled tubs in the basement. We are pretty cramped in this house and could use a bigger place but can't afford one right now.
So far our arrangement in the dining room is working pretty well, but I will admit I'm a lousy decorator (we're still using the ugly curtains that came withthe house, lol) so as long as things are picked up, clean and reasonably organized i'm happy.
(Oh, and right now my house is a disaster. I kept gettinng more and more behind in housework with a difficult pg ad new baby and we're just now starting to get caught up.)