Suspended windows and doors give this open space the illusion of a closed room. More stunning outdoor spaces: http://www.bhg.com/home-improvement/porch/outdoor-rooms/small-outdoor-living-spaces/?socsrc=bhgpin050413secludedgetaway=5
The outdoor fireplace with home-matching style/finishing transforms the old covered patio into an outdoor room-like space - especially because it serves as the second, opposing wall to the side of the house. Pillars on sides add enough structure to define the "new outdoor room".
Privacy for the backyard. Add a pergola separately, but with style to add height. Plant some beautiful vines to cover as much or little as you want for added privacy in your backyard. Great for those with second story homes surrounding them.