Establish an Enclosure
To create an outdoor space that feels like it has purpose, sometimes it helps to establish a kind of enclosure -- a feeling of beginning and end. This lets people know that certain areas are for use, while others may be simply for show. For example, a seating area in your back yard can be given its own floor that sets it apart from the lawn's grass. Laying down a design of brick or gravel as a foundation will clearly separate the living space from the rest of the outdoors. Low walls around the area can also provide a good sense of enclosure without making people feel like they're in another room of your house.
Pergolas are also a popular choice for outdoor living spaces, since they provide a sense of enclosure that still feels wide open and lets in plenty of sunlight. Many people incorporate vines and other plants around posts and lattices to add a natural, outdoors feel to the area.