The living area is the main area of the Observatory. It is where Elena will spend most of the day, and it is where you will arrive upon entering the Observatory after returning from the Towers. There is an upstairs section, a kitchen and a dining table in here. Elena will be in the kitchen cooking at 7:00, 12:00 and 18:00, and sometimes you will eat with her at the dining table when talking to her at these times.
There are three doors in this area: the main door which leads outside and to the Towers; the door to Mavda's area of the Observatory, where you can call Mavda when you wish to talk to her, upgrade your weapons, create new items, repair broken items and buy or sell items; and the door which leads to the courtyard, from where you can access the final two parts of the Observatory, the cellar and the roof.
There are a few interactable objects in the Living Area. There is the trunk, where you can store items. There is the desk, where you are able to save your game. There are also two beds, one for Elena and one for Aeron. Sleeping in your bed will allow you to change the time to whenever you wish.